Scale-Up Manufacturing Investment Company Act of 2025
- Sponsor
- Sen. Booker, Cory A. [D-NJ]
- Committees
- Small Business and Entrepreneurship Committee (primary)
- Last action
- Jul 23, 2025
Bottom line
The bill creates a new public-private partnership program, modeled on the SBIC program, to address a critical capital gap for technology-intensive manufacturing startups to scale production domestically.
What it actually does
This bill establishes the Scale-Up Manufacturing Investment Company (SUMIC) Program within the Small Business Administration (SBA). The program provides federal leverage, in the form of guaranteed debentures and preferred securities, to privately managed investment funds. These funds, known as SUMICs, will then make debt and equity investments in small and emerging manufacturers to support the building of first commercial production facilities, novel manufacturing capabilities, or the introduction of emerging manufacturing technologies in the United States.
Proponents argue
Proponents argue that the bill is essential for strengthening the United States manufacturing sector, creating high-quality jobs, fostering innovation, and ensuring that groundbreaking technologies invented in the U.S. are also manufactured domestically. They contend that the current capital market fails to adequately support manufacturing startups through the 'second and wider valley of death' of commercial production, leading to a loss of domestic manufacturing capability.
Opponents contend
No explicit opposition arguments are detailed within the bill text. Potential criticisms might focus on the financial risk to the federal government, the potential for market distortion, or concerns about the administrative burden and oversight challenges of a new federal investment program.
The bill is relatively concise for its scope, allowing an informed reader to grasp its core mechanisms within a reasonable timeframe.
Section 3, adding Part D, Section 399B to Title III of the Small Business Investment Act of 1958
Establishment of the Scale-Up Manufacturing Investment Company (SUMIC) Program
This provision formally creates the SUMIC program, directing the Administrator of the Small Business Administration (SBA) to provide financial leverage to private investment funds. The purpose of this leverage is to support debt and equity investments in small and emerging manufacturers for 'qualifying manufacturing projects' in the U.S. The program is to be administered by the Associate Administrator.
Supporters argue
Supporters contend that establishing this program is a direct response to the identified capital gap for manufacturing scale-up, which is essential for national economic security and innovation.
Critics contend
No specific opposition is detailed in the bill text.
Tradeoffs
This provision balances the need for federal intervention to address market failures in manufacturing finance against potential administrative burden and risk to public funds.
Section 3, adding Part D, Section 399C
Criteria for Licensing Participating Investment Funds
This section outlines the application process for private investment funds seeking a license to operate under the SUMIC program. It mandates that the SBA establish selection criteria, which must include the fund manager's proven investment experience, a positive investment track record, experience with small manufacturers and emerging technologies, and adherence to standard fund structure and economics, among other factors.
Section 3, adding Part D, Section 399D
Federal Leverage for Participating Investment Funds
The Administrator may provide up to $1 of federal leverage for every $1 of private capital raised by a participating investment fund. There are limits: a single fund cannot receive more than $500,000,000 in outstanding leverage, and the aggregate for all funds is capped at $1,000,000,000 per fiscal year. Participating funds must have at least $250,000,000 in private capital. A leverage fee of 3% to 5.5% of the face amount of the leverage issued will be charged.
Section 3, adding Part D, Section 399F
Investment Requirements for Small and Emerging Manufacturers
Participating investment funds must use the federal leverage to make debt and equity investments in small and emerging manufacturers for 'qualifying manufacturing projects.' Federal leverage cannot constitute more than 50% of any single investment made by a fund into a manufacturer, and a single investment by a fund cannot exceed 10% of the fund's total capital. The SBA is also directed to enhance outreach to increase investments in businesses owned by socially and economically disadvantaged individuals, women, veterans, or individuals with disabilities.
Section 3, adding Part D, Sections 399G and 399J
Oversight and Reporting Requirements
Participating investment funds are subject to examinations by the SBA's Investment Division, with costs potentially assessed against the fund. Funds must submit semi-annual valuations of their loans and investments, with annual independent certified public accountant audits. They must also report semi-annually on measurement criteria, leverage use, and, for non-disadvantaged businesses, the percentage of socially and economically disadvantaged employees.
This provision explicitly allows national banks, member banks of the Federal Reserve System, or nonmember insured banks (to the extent permitted by state law) to invest in one or more participating SUMIC funds or entities established solely to invest in them, up to 5% of the bank's capital and surplus.
Section 3(b), amending Section 13(d)(1)(E) of the Bank Holding Company Act of 1956
Why it matters:This is standard legislative practice for making conforming amendments to other statutes to ensure consistency and facilitate the new program. It is not necessarily evasive but can be easily overlooked by someone focusing only on the new program's core provisions.
Case for: Supporters argue this is crucial for attracting significant private capital to the SUMIC program by explicitly authorizing banks to invest, leveraging their substantial resources.
Case against: Critics might argue that allowing banks to invest in these funds could expose them to new risks, especially if the manufacturing investments are considered high-risk, potentially impacting financial stability.
Estimated impact: Potentially billions of dollars in private capital could be unlocked for the program if banks choose to invest.
This provision amends the Bankruptcy Code to make a 'participating investment fund as defined in section 399A of the Small Business Investment Act of 1958' ineligible for bankruptcy.
Section 3(c), amending Section 109(b)(2) of title 11, United States Code
Why it matters:This is standard legislative practice for ensuring consistency across federal statutes. It is a technical amendment to protect federal interests.
Case for: Proponents would argue this protects the federal government's investment and leverage by preventing participating funds from using bankruptcy to discharge obligations, ensuring greater accountability.
Case against: Critics might argue it removes a crucial safety net for funds facing severe financial distress, potentially leading to more abrupt failures or greater losses for other creditors.
Estimated impact: Protects federal financial interests in the event of fund failure.
This provision amends the Community Reinvestment Act (CRA) to explicitly state that investments made by financial institutions in participating SUMIC funds shall be considered a factor by appropriate Federal financial supervisory agencies when assessing the institution's CRA record.
Section 3(d), amending Section 804 of the Community Reinvestment Act of 1977
Why it matters:Standard legislative practice for making conforming amendments. It serves as an incentive mechanism.
Case for: Supporters contend this incentivizes financial institutions to invest in SUMIC funds by allowing them to count these investments towards their CRA obligations, further channeling private capital into manufacturing scale-up, particularly in communities that may benefit from new manufacturing facilities.
Case against: Some critics of CRA might argue that expanding the types of investments that qualify for CRA credit could dilute the original intent of the act, which was to encourage lending to low- and moderate-income communities.
Estimated impact: Potentially increases bank investment in SUMIC funds, directing capital to manufacturing projects.