The SBA Will Save America

Author: Zach Glabman (X article, June 14, 2026) URL: https://x.com/zachglabman/status/2066347031170257341 One-line: Most of America’s industrial base is small, cash-flowing manufacturers that venture won’t fund and national banks can’t read; the SBA’s 2025–26 manufacturing products act as a “synthetic Hausbank” that makes that risk legible, and frees equity to chase the frontier.

Glabman re-shared it on October 27, 2026 with: “venture equity is the wrong way to fund a factory, but the fall of the regional banking system in the US makes it extremely difficult to fund industrial assets. who’s building this” (tweet). It is a follow-up to his earlier “blueprint for re-industrialization,” which mapped five stakeholders: industry, capital, education, tech and government.

Key claims

• The orphaned middle. Shops with revenue, employees and order backlogs (a better castings shop, a thermoplastics maker building its own machines) can’t get growth capital. Venture passes because it isn’t a power-law bet; banks underwrite “the auction value of its machines instead of the order book,” and a homebuilt machine has no auction value at all.
• Venture is a recent monoculture. “Before software ate the world, venture capital was not how companies were funded.” Hard assets are capital-intensive, thin-margin until scale, and the moat comes after the expensive part. Nox Metals made venture work, but “most of the base will never have that option.”
• Capital flows to legible risk. SaaS metrics (LTV/CAC, ARR) let you price a company over Zoom. A factory’s value (feel for a drifting spindle, a heat-treat relationship) is illegible, so the bank underwrites collateral, and “the best-run shop in the county and the worst one might get the same terms.” Net-90/120 contracts against a material bill due next week can kill a shop on its biggest order.
• The Mittelstand model. German manufacturers each have a Hausbank, a local lender with a decades-long relationship that lends more when a borrower’s rating slips. The US had 14,000+ commercial banks in the mid-1980s; deregulation and crises consolidated them, leaving ~4,000 community banks.
• What the SBA shipped. A Made in America Manufacturing Initiative and Office of Manufacturing and Trade (March 2025), with a multi-state roadshow; MARC, the agency’s first manufacturer-specific loan product (revolvers and term loans to $5M, September 2025); zero upfront fees on 7(a) manufacturing loans under $950K and waived 504 fees; first $3.5M of MARC loans by December; the combined 7(a)/504 cap doubled to $10M (May 2026).
• A guarantee is “synthetic relationship banking.” It translates risk rather than subsidizing it. The S&L crisis ($124B to taxpayers) is the warning, but originating banks keep 15–25% of every loss. His caution: “Watch the default rates by originator.”
• Debt can’t fund the frontier. Capped-upside debt “mathematically cannot price uncapped uncertainty,” so a new material or process needs equity. The SBA’s contribution is to de-risk working capital so equity goes to frontier risk “instead of plugging a cash-flow hole.” Workforce is the other limit: a machinist is roughly a five-year build.
• The precedent. In the blueprint he called for a new MITI-style cabinet body; the SBA showed an existing agency “handed a clear target” could produce coherent industrial finance policy. “The best way to fund a factory is by putting in orders.”

Notable quotes

Venture is a recent monoculture that now dominates how ambitious things get funded in America.

It’s a bunch of dudes cutting metal. Faster, better, cheaper (and cooler) than anyone else.

So when the shop asks for a loan, the bank does the only thing it can do with illegible risk: it ignores capability entirely and underwrites collateral, or the auction value of used machines.

A federal guarantee like this one is synthetic relationship banking, and bigger than any single loan.

Because debt has capped upside, a lender’s best case is getting paid back, and an instrument with capped upside mathematically cannot price uncapped uncertainty.

Every argument that reindustrialization requires some grand structural overhaul from the top is being mogged by the most boring agency in Washington.

Replies worth keeping (Oct 27 re-share)

• Jack Watson (@jack_watson_hfw): “I’m increasingly interested in merchant banking.” See Merchant Banking.

How it connects

• American Manufacturing, Industrial Policy, Hard Tech, American Dynamism: the financing gap underneath the reindustrialization story.
• SBA Loans: the instrument he argues is now the industrial base’s best debt rail.
• Merchant Banking, venture debt: the alternative capital forms the replies reach for.
• Inside Micron’s Attempts to Reindustrialize the Dying American Heartland and He Came From Oz To Save American Manufacturing: other reads on the same buildout.