WASHINGTON—Monroe Capital LLC announced plans to launch a new fund, the Drive Forward Fund LP, valued at up to $1 billion to support smaller auto suppliers as the industry shifts from gasoline to electric vehicles (EVs). 

Backed by low-cost government-guaranteed loans through a U.S. Small Business Administration (SBA) license, the fund will provide smaller auto manufacturers with access to affordable capital to refinance, expand, and diversify. More than 250,000 workers in the U.S. are employed by small- and medium-sized auto suppliers.

Additionally, the U.S. Treasury Department launched the Michigan Auto Supplier Transition Program with a $9.1 million grant to help smaller companies secure financing for EV component production. The U.S. government’s new tariffs on Chinese EVs and related components, along with stricter EV tax credit rules and emissions regulations, are pressuring automakers to shift supply chains and build cleaner vehicles.

Monroe Capital CEO Ted Koenig emphasized the fund's importance for fostering growth and innovation in the U.S. automotive supply chain, especially for smaller suppliers who often struggle to access financing. The fund will be advised by an auto industry council and aims to start fundraising after the SBA licensing process is complete.

John Bozzella, CEO of the Alliance for Automotive Innovation, added that the fund would help small suppliers modernize and maintain a competitive, secure supply chain. The U.S. government has also committed significant investments, including $1.1 billion for GM and Stellantis to convert plants to EV production and $3 billion for battery manufacturing projects. In May, Vice President Kamala Harris announced over $100 million for small- and medium-sized auto parts manufacturers to expand or retool.