Congress Advances $10M SBA Loan Cap for Small Manufacturers

Congress is moving forward with bipartisan legislation designed to inject significant capital into the U.S. manufacturing sector by doubling the loan limits for key Small Business Administration (SBA) programs.

The Made in America Manufacturing Finance Act of 2025 proposes to raise the cap on SBA 7(a) and 504 loans from $5 million to $10 million exclusively for small manufacturers, a move supporters say is critical for strengthening domestic industry and encouraging reshoring.

The bill has gained traction in both chambers. The House version, H.R. 3174, introduced by Small Business Committee Chairman Roger Williams (R-Texas), was reported by the committee on August 15, 2025.

Its Senate counterpart, S. 1555, sponsored by Senate Small Business Committee Chair Joni Ernst (R-Iowa) and Senator Chris Coons (D-Delaware), has also advanced, with the committee holding hearings as recently as September 17, 2025.

The proposed increase addresses a financing gap for loans between $5 million and $10 million, which are hard to secure from banks. The Congressional Budget Office states the bill would cost less than $500,000 over 2025-2030 without increasing the deficit.

The legislation also extends loan eligibility to aquaculture and fishing firms, recognizing them as part of the manufacturing sector. This bipartisan effort underscores a commitment to using federal loan guarantees to strengthen national manufacturing and reduce reliance on foreign supply chains.

What does this mean for alternative business lenders?

Easier access to SBA-backed capital through the Made in America Manufacturing Finance Act of 2025 will increase competition for U.S. alternative business lenders targeting the manufacturing middle market, but it also opens new opportunity niches and requires strategic product positioning.

Impact on Middle Market Deal Flow

• Increased SBA loan size and broader eligibility will drive some manufacturers to prefer SBA products for their attractive rates and government guarantees, potentially reducing immediate demand for traditional high-rate alternative loans among strong-credit borrowers.

• However, not all manufacturers will qualify for SBA loans (due to time in business, credit, use of funds, or speed requirements), so the pool seeking alternative finance will remain sizable, especially for time-sensitive, asset-lite, or high-growth deals.

• The law’s higher caps could stimulate a broader manufacturing rebound, increasing total financing needs, which can benefit alternative lenders able to move nimbly or serve adjacent, underserved segments.

Positioning Alternative Products Against Expanded SBA Access

• Speed & Flexibility: Emphasize much faster approval and funding compared to SBA timelines. Many manufacturers need quick cash for urgent projects or supply chain opportunities, which alternative lenders are better positioned to fulfill.

• Eligibility Gaps: Target manufacturers who fall outside SBA guidelines—newer companies, asset-lite borrowers, or those with less traditional credit metrics. Use data-driven underwriting to qualify deals SBA lenders decline.

• Customization: Offer deal structures SBA can't, such as revenue-based financing, mezzanine debt, bridge loans, AR/inventory financing, or covenant-light senior secured lending, which appeal to manufacturers seeking flexibility or less onerous covenants.

• Innovative Products: Leverage digital platforms, embedded finance, and sector-specific solutions (e.g., equipment leases, factoring, or contract-based capital) tailored for manufacturing's unique working capital or capex cycles.

• Service & Relationships: Focus on high-touch advisory, post-close support, and “trusted partner” status—areas where highly regulated banks and SBA processes are less nimble.

Summary Table: SBA vs. Alternative Lenders for Manufacturing (2025)

Alternative lenders can thrive by focusing on speed, innovative products, and personalized service—especially for manufacturers who don’t fit in the SBA’s expanding box or who need working capital on non-standard timelines.

Podcast Video: Alt Lending Strategy: Canadian Case Study for US Markets with Kingsman Capital CEO Amman Sikandar

This episode explores Kingsman Capital's 10-year journey in the Canadian market, providing a unique operational blueprint applicable to current US market dynamics.

This isn't theory - it's pattern recognition from a lender who navigated market concentration, regulatory shifts, and technology adoption while maintaining profitability.

The insights extracted here focus on three core areas:

1. Strategic positioning that generates consistent deal flow

2. Operational infrastructure that scales without breaking

3. Capital efficiency models that satisfy institutional investors

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