The Office of Strategic Capital: A New Financing Tool for Critical Technology Companies
The U.S. Department of Defense has created a financing office that deserves attention from companies, investors, and advisors working in defense-adjacent technology: the Office of Strategic Capital, or OSC. OSC was established to attract and scale private capital into technologies and supply chains that are important to U.S. national security (OSC About).
Unlike a traditional procurement office, OSC is not simply buying goods or services for the government. Its role is to use financial tools, including loans and loan guarantees, to help critical technology companies scale production capacity (FY2025 Investment Strategy).
Why OSC Matters
Many critical technologies need large amounts of capital before they can reach commercial scale. That can include manufacturing equipment, production facilities, supply-chain expansion, or modernization of existing assets.
OSC is designed to address that gap by using the strength of U.S. capital markets to “crowd in” private investment for national-security priorities (OSC About). Congress gave OSC statutory authority through the FY2024 National Defense Authorization Act, including authority to provide loans, loan guarantees, and technical assistance in covered technology categories (FY2025 Investment Strategy).
The Equipment Finance Program
OSC’s first major direct lending product is an equipment finance program. The initial program made up to $984 million available for direct loans to finance the construction, expansion, or modernization of commercial equipment in the United States (Federal Register Notice).
Loan sizes under that first offering ranged from $10 million to $150 million (Federal Register Notice). OSC states that its credit program may offer Treasury-rate-based pricing, longer repayment periods, deferred payment, flexible amortization, and the ability to combine OSC loans with private equity, corporate debt, grants, and other sources of funding (OSC Credit Program).
Covered Technologies
OSC’s covered technology categories include advanced manufacturing, microelectronics, battery storage, cybersecurity, edge computing, quantum computing, quantum security, quantum sensing, space launch, spacecraft, synthetic biology, and advanced materials (FY2025 Investment Strategy). OSC’s FY2025 strategy also identified particular interest in areas such as autonomous mobile robots, hydrogen generation and storage, microelectronics assembly, microelectronics manufacturing equipment, sensor hardware, spacecraft, and synthetic biology (FY2025 Investment Strategy).
Who May Be a Fit
OSC financing is not aimed at every startup. The credit program is generally focused on creditworthy businesses that can show project viability and repayment capacity (OSC Credit Program).
U.S.-domiciled public and private companies may be eligible, including companies with foreign ownership, if they support a covered technology category and meet program requirements (OSC Credit Program). OSC states that early-stage, pre-revenue companies are generally not eligible unless supported by a repayment guarantee from a creditworthy sponsor (OSC Credit Program).
Projects may also face issues if the federal government is the sole expected user, if repayment depends mainly on federal grants or contracts, or if counterparties or project jurisdictions raise U.S. national-security concerns (OSC Credit Program).
A Strong Demand Signal
Demand for OSC financing appears significant. OSC reported more than 200 applications totaling $8.9 billion in financing requests for its first domestic manufacturing loan program, compared with $984 million in initial lending capacity (DoD Release).
That demand suggests companies are actively looking for alternatives to traditional commercial debt, venture capital, and government procurement. For capital-intensive businesses in critical technology sectors, OSC may become an important part of the financing landscape.
Key Takeaways
Companies considering OSC financing should evaluate whether their project fits a covered technology category, whether the project has a strong domestic manufacturing or supply-chain nexus, and whether the company can demonstrate repayment capacity. Counsel and advisors should also consider foreign ownership, national-security risk, federal funding dependence, and federal compliance requirements such as NEPA, Davis-Bacon, American Iron and Steel, and Build America Buy America (OSC Credit Program).
The bottom line is that OSC is not a grant program and it is not ordinary defense procurement. It is a strategic credit platform designed to help private companies scale technologies and supply chains that matter to U.S. national security.
For businesses in advanced manufacturing, microelectronics, energy storage, space technology, quantum, robotics, and other covered sectors, OSC is worth watching closely.
If you are considering designing a plan for OSC financing as part of your growth strategy, consult with a Texas corporate attorney like Michael A. Weaver at Saunders | Walsh to ensure corporate compliance and structural efficiency.