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December 06, 2022 | Tom Ballard

SBA, DoD announce new SBIC initiative focused on critical technologies for national security

This effort is designed to grow investment in critical technologies vital to U.S. national security

Two federal agencies – the U.S. Small Business Administration (SBA) and the U.S. Department of Defense (DoD) – have announced a new joint effort to establish something named the Small Business Investment Company (SBIC) Critical Technologies Initiative.

As described in this news release, it is designed to grow investment in critical technologies vital to U.S. national security. Underpinning this partnership is a new regulation that the SBA has proposed, which expands the SBIC program and introduces a new financial instrument called the Accrual Debenture. This instrument is designed to align with the cash flow patterns of start-ups and supports the long duration often required to incubate and scale technology investments.

Many defense technologies require heavy research and development investment, and this instrument is designed to attract the patient private capital necessary to support these innovations.

“SBA and DoD’s new historic initiative will help make sure America maintains its edge in technologies critical to national security,” said SBA Administrator Isabella Casillas Guzman. “DoD’s newly established Office of Strategic Capital will leverage SBA’s expertise and successes aligning and scaling public and private capital through its Small Business Investment Company program to address funding gaps in the innovation ecosystem. We are proud to be deepening SBA’s longstanding partnership with DoD to drive forward America’s technological and defensive strength – and in turn America’s national security and prosperity.”