Pentagon requests more than $20B for strategic capital loan program in 2027
The Defense Department is asking Congress for about $20.2 billion in the next fiscal year for a loan program designed to help eligible companies working in certain technology areas of interest.
The funding request for the Defense Strategic Capital Credit Program, which is overseen by the Office of Strategic Capital, was included in fiscal 2027 budget documents recently released by the Pentagon and seeks to boost spending on the initiative by more than an order of magnitude.
The program was allotted less than $1.5 billion for fiscal 2026, according to budget documents.
The OSC was initially stood up under the Biden administration and formally enacted into law through the fiscal 2024 National Defense Authorization Act, which gave the office new authorities to issue loans and loan guarantees to eligible companies working on critical tech categories. The organization offers direct loans up to $150 million to finance projects.
For example, last year OSC provided a $150 million loan to MP Materials to add heavy rare earth separation capabilities to its existing processing facility in Mountain Pass, California.
“OSC’s loan and loan guarantee authority is utilized to attract and scale investments for national security,” according to a Pentagon CTO website about the initiative.
The 31 tech categories covered by the initiative include advanced bulk materials, advanced manufacturing, autonomous mobile robots, battery storage, biochemicals, bioenergetics, biomass, cybersecurity, data fabric, decision science, edge computing, external communication, hydrogen generation and storage, mesh networks, and microelectronics assembly, testing and packaging.
They also include microelectronics design and development; microelectronics fabrication; microelectronics manufacturing equipment; microelectronics materials; nanomaterials and metamaterials; open RAN; optical communications; sensor hardware; solar; space launch; spacecraft; space-enabled services and equipment; synthetic biology; quantum computing; quantum security; and quantum sensing.
The Pentagon did not immediately respond to a request for comment on Monday about the proposed budget increase.
According to the program website, OSC offers flexible financial terms — such as long repayment periods and deferred payment — and its loans can be combined with private equity, corporate debt, grants and other funding sources to fully fund a project.
