Pentagon deploys $450M in strategic loans to bolster U.S. space infrastructure

The Pentagon’s Office of Strategic Capital has announced three loans totaling $450 million to U.S. space firms, aimed at bolstering launch and space monitoring capabilities.

The latest award, a $150 million loan to Rocket Lab announced Monday, will support increased flight rates of its reusable Neutron rocket to meet rising commercial and national security demand for space access.

Rocket Lab confirmed last month that Neutron’s first launch has been delayed from late this year to sometime next year, following previous plans for a 2024 debut that were pushed to late 2025.

A separate $150 million loan awarded Oct. 26 to Stoke Space will fund a second launch pad at Cape Canaveral Space Force Station for its Nova reusable rocket, with the company now targeting a March 2027 liftoff, postponing its prior 2025 goal.

These awards reflect the Pentagon’s growing concern over a potential gap in space launch vehicle availability after 2028, when SpaceX will cease flying commercial payloads on Falcon 9. A Quilty Space report from Oct. 29 projected a shortfall of at least 150 launches by 2030, including military payloads as Space Force demand rises.

Rocket Lab and Stoke were added to the Space Force’s pool of potential launch providers under the National Security Space Launch (NSSL) Phase 3 Lane 1 program in March 2025, covering easier-to-reach orbits, lighter payloads, and non-essential missions.

On Nov. 4, the Pentagon announced a $150 million loan to space monitoring firm LeoLabs to accelerate deployment of critical radar infrastructure and advanced decision science software, particularly its new Scout mobile radar.

The LeoLabs announcement states the award will expand domestic radar manufacturing capacity, including completion of two large-scale manufacturing facilities by 2028.

An industry source told Breaking Defense that the influx of loan announcements reflects the Pentagon’s need to finalize awards by fiscal year’s end, resulting in a regular cadence of releases. Although fiscal 2026 officially concluded Sept. 30, DoD contract announcements often follow after awards to complete official paperwork.

The Office of Strategic Capital’s year-end activity extends beyond space, funding non-space initiatives as well.

On Nov. 2, DoD announced a loan commitment of up to $450 million to drone startup Neros, supporting its vertically integrated domestic manufacturing capacity for dual-use small unmanned aircraft systems, including platforms, ground control systems, and critical components such as motors, radios, flight electronics, sensors, and batteries.

A $75 million loan to California-based Halo Industries, announced Nov. 5, will support scaling production of its innovative Silicon Carbide (SiC) semiconductor wafers.

As with all Office of Strategic Capital loans, the space company awards are conditional, requiring financial due diligence and a matching investment from the recipient companies.

The Office of Strategic Capital was established by DoD in 2022 under the Office of the Secretary of Defense for Research and Engineering, and later authorized by Congress to run a pilot investment program through FY28 under the FY24 National Defense Authorization Act.

A September Congressional Research Service report outlines the office’s remit, which includes direct debt financing for companies, as well as financing for venture capital, private equity, and other investment funds, plus loans and loan guarantees to third-party investment funds.

The CRS report notes that for FY26, Congress appropriated $97.8 million for the capital assistance pilot program, designed to subsidize up to $4.4 billion in loans, loan guarantees, and technical assistance. The office also received $2 million for FY26 through the defense-wide RDT&E account.

In September 2024, the office announced $984 million in direct loan funding availability on a rolling basis, accompanied by a Federal Register notice listing 34 categories of dual-use technology for potential investment. While the office primarily focuses on microelectronics and computer-related tech, three categories are space-specific: space launch, spacecraft, and space-enabled services and equipment. Several others are space-adjacent, including optical communications, sensor hardware, and solar power.

The September CRS report further noted that the Pentagon’s FY27 budget request allocates $20 million in FY25 reconciliation funding for RDT&E activities in FY26.

The FY27 request includes $216 million in discretionary funding and $20 billion in mandatory funding for the Office of Strategic Capital’s capital assistance pilot program, along with $19 million for the office’s RDT&E activities, according to CRS.

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