Investment firm Monroe Capital LLC announced plans to establish a $1 billion fund aimed at supporting smaller auto suppliers as the automotive industry transitions from gasoline-powered vehicles to electric vehicles (EVs). The new initiative, named the Drive Forward Fund LP, seeks to provide financial assistance to small- and medium-sized suppliers who are critical to the U.S. automotive supply chain but often face challenges accessing capital.
The White House praised the fund, stating it would “facilitate access to lower cost capital for small- and medium-sized auto manufacturers to refinance, grow, and diversify their businesses.” According to the administration, more than 250,000 workers across the country are employed by small- and medium-sized auto suppliers, many of whom are directly impacted by the industry’s shift toward electrification.
The fund will receive backing through low-cost government-guaranteed lending, provided by a U.S. Small Business Administration (SBA) license, Monroe Capital said. CEO Ted Koenig emphasized the importance of the initiative in driving innovation within the sector, stating, “We believe this new Drive Forward Fund will be critical to catalyzing growth and innovation within America’s automotive supply chain.”
Additionally, on Monday, the U.S. Treasury Department unveiled a $9.1 million grant for the Michigan Auto Supplier Transition Program. This grant is designed to help smaller auto suppliers secure the necessary financing to shift their production toward EV components, an increasingly important sector as automakers strive to meet stricter emissions standards and adapt to new U.S. government tariffs on Chinese EVs, batteries, and critical minerals.
John Bozzella, CEO of the Alliance for Automotive Innovation, which represents major automakers including General Motors, Toyota, and Volkswagen, commented on the potential benefits of the new fund. He noted, “A successful EV transformation requires a cutting-edge automotive supply chain that keeps the country competitive and underpins our economic and national security.”
Monroe Capital indicated that fundraising for the Drive Forward Fund will begin following the completion of the SBA licensing process. The fund will be advised by an auto industry council, further ensuring its alignment with the needs of the evolving industry.
Source: Reuters
