SBA moves front and center in GOP’s manufacturing push

The Small Business Administration has become a critical player in the effort by Republican lawmakers and the Trump administration to boost U.S. manufacturing.

The second Trump administration has made renewing manufacturing a major component of its economic program and given the SBA a high-profile role in promoting that goal. Yet the manufacturing plan is linked closely to a much less popular proposal to raise tariffs, which has drawn pointed criticism from Democrats.

At two recent Senate hearings, GOP lawmakers put the spotlight on a pair of bills intended to funnel more capital to small manufacturers. Both bills have the Trump administration’s support.

On Tuesday, Senate Small Business and Entrepreneurship Committee Chair Joni Ernst, R-Iowa, renewed her call for the passage of legislation that would double the SBA’s loan-size limit for manufacturing loans made under its 7(a) and 504 lending programs.

Meanwhile Rep. Dan Meuser, R-Pa., has introduced a bill that would make manufacturing investments more attractive for SBA-backed small business investment companies. The Senate Small Business Committee focused on Meuser’s Investing in All of America Act during a May 14 hearing.

Meuser’s bill impacts small-business investment companies, which are allowed to access SBA-backed debt to supplement their own privately raised capital. Typically, the leverage is limited to $2 dollars of SBA-backed debt for every one dollar of private funding. Meuser’s legislation would create an exception by exempting manufacturing investments from a fund’s leverage cap.

John Mickelson, managing partner of Midwest Growth Partners, a West Des Moines, Iowa-based small-business investment company, described the legislation as providing “bonus leverage for small manufacturers” during his testimony at the May 14 hearing. 

“This legislation can unlock significantly more [investment capital] for our domestic industrial base,” Mickelson said. “Right now, 20% of dollars from SBICs roughly go into manufacturers. With some bonus leverage, we would expect that number to go higher.”

Ernst introduced the Made in America Manufacturing Finance Act alongside Rep. Roger Williams, D-Texas, chairman of the House Small Business Committee, on May 1. She again promoted the legislation, which would raise the SBA-backed loan limit for small manufacturers from $5 million to $10 million, at Tuesday’s hearing.

“If we are serious about competing with and beating China, creating good-paying jobs, and restoring economic resilience,” Ernst said, “we must empower our small manufacturers to lead the way.”

SBA Administrator Kelly Loeffler testified that her agency’s size limits for loans made under both its 7(a) and 504 lending programs have remained at $5 million for more than a decade. A higher ceiling would pave the way for more robust expansion activity and higher levels of job creation, she said.

“Access to capital is the number-one concern we hear,” Loeffler said. “I’ve heard manufacturers say that they already have the machines planned that they will purchase when they can get that access to capital.”

Brian Riley, president and CEO of Guardian Bikes in Seymour, Indiana, said that Ernst’s legislation could be “instrumental” in fueling manufacturing growth.

He cited his own experience in obtaining enough capital to support Guardian’s expansion. He was able to access an SBA 7(a) loan but it didn’t meet all of the funding requirements, forcing him to seek cash from private investors.

“That was me going around, pitching a lot of individuals, getting them to believe in the vision, taking $50,000 or $100,000 checks left and right to try to pile together a few million dollars” to construct a factory, Riley said at the May 14 hearing.

The 7(a) program, which guarantees loans made by banks and other private lenders, is the SBA’s flagship program. So far in the SBA’s 2025 fiscal year, which began on Oct. 1, the agency has reported $23.8 billion of 7(a) loan approvals. The 504 program focuses on financing the acquisition of heavy equipment and real estate. Its fiscal-year-to-date approvals total $4.8 billion.

Both of the manufacturing-focused SBA bills have attracted some Democratic support. The Senate version of Ernst’s bill is co-sponsored by Sen. Chris Coons, D-Del., while Meuser’s legislation has the backing of Democratic Reps. Hillary Scholten of Michigan, Sharice Davids of Kansas and Donald Davis of North Carolina.

Sen. John Hickenlooper, D-Colo., cosponsored an earlier version of the Investing in All of America Act back in 2023. He spoke favorably about the current legislation at the May 14 hearing. 

At the same time, Democratic lawmakers have shown no reluctance to criticize Republican economic policies, especially tariffs, which have become a flashpoint. President Donald Trump insists levies on foreign goods will help usher in the much-sought made-in-America revival. Democrats, however,  argue tariffs hurt the same small manufacturers Trump and his allies in Congress are seeking to help.

“Trump’s destructive, chaotic and thoughtless tariff policy is turning Main Street into Pain Street,” Sen. Edward Markey, D-Mass., the top Democrat on the Small Business Committee, said at Tuesday’s hearing. 

Small businesses, including many manufacturers “are being forced to shut their doors because of President Trump’s destructive tariffs,” Markey added. “Consumer confidence levels are taking an historic nosedive. That is happening day after day.”

The SBA’s support for the bills sponsored by Meuser and Ernst, along with other pro-manufacturing initiatives, bears some resemblance to the approach taken under Loeffer’s Biden administration predecessor Isabel Casillas Guzman — except that the issue Guzman stressed was small-dollar lending.

Guzman introduced a number of policy and rule changes designed to boost the number of SBA-backed small-dollar loans, including fee waivers on loans of $1 million or less, underwriting adjustments and the elimination of a 40-year-old moratorium that had blocked nondepository lenders from participating in the 7(a) program.

Guzman believed that small-dollar loans were more likely to benefit women, minorities, veterans and other underserved entrepreneur groups. But Loeffler has said the changes resulted in a revenue shortfall, accompanied by a spike in problem 7(a) loans. Loeffler has reversed nearly all of the small-dollar initiatives during her first three months as administrator.