The Department of Commerce has no plans to implement a loan guarantee program aimed at bolstering technological innovation among small- and medium-sized U.S. manufacturers, according to a report from the Government Accountability Office (GAO).
To invest in innovative manufactured goods and processes, improve U.S. competitiveness, and help address the capital needs of U.S. manufacturers, the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science (COMPETES) Reauthorization Act of 2010 directed the Secretary of Commerce to establish the Innovative Technologies in Manufacturing (ITM) program. The ITM program was to provide loan guarantees to small and medium-sized manufacturers for the use or production of innovative technologies. Commerce’s Economic Development Administration (EDA) is responsible for implementing the program.
EDA officials provided several reasons for not implementing the program:
EDA officials told GAO that they expected limited demand by small and medium-sized manufacturers for loans under the ITM program. However, they said that it would be helpful to gauge potential demand for loans, because the United States entered an economic recession around 2020 and the recent Coronavirus Disease 2019 (COVID-19) pandemic has led to changing conditions in the manufacturing sector and the global supply chain.
EDA officials also said that it would be difficult to execute the ITM program without duplicating alternative loan programs available to help businesses, including those in the innovative manufacturing sector, such as the Small Business Administration’s (SBA) 7(a) loan program.
In addition, EDA officials expressed uncertainty over the level of interest and participation that potential lenders would have in the ITM program if EDA were to implement it—for example, because potential lenders are familiar with and might be more likely to continue their participation in SBA loan programs.