A pump jack does its work at an oil field in Kern County. Photo by Frank Lopez

The U.S. Small Business Administration has expanded a 90% loan guarantee to small businesses across the energy production supply chain, potentially opening a new financing option for California companies involved in energy production, manufacturing and related industries.

Eligible businesses can access the new Energy Guarantee through the agency’s International Trade Loan Program, according to an SBA news release. The change, established under the agency’s updated standard operating procedures known as SOP 50 10 8.1, raises the SBA guarantee to 90%, compared with the standard 75% offered through its 7(a) Loan Program.

The enhanced guarantee applies to eligible small businesses involved in energy production, distribution, grid modernization and equipment manufacturing. The SBA said the higher guarantee is intended to encourage participating lenders to provide private capital for businesses seeking to expand energy output and related infrastructure.

“From the energy-producing basins of Texas, New Mexico, and Oklahoma to the mining, manufacturing, and energy-supply-chain businesses of California, Arizona, and Nevada, small businesses across the region are essential to strengthening America’s domestic energy capacity,” Regional Administrator Steven Snow said in the release.

Snow said the guarantee could help businesses obtain long-term capital for production expansion, equipment modernization and distribution networks. The program could be relevant to eligible California businesses seeking financing for equipment, production or distribution projects.

The energy initiative follows two other enhanced guarantees launched by the SBA for targeted industries. Since May, the agency said it has approved $110 million in capital through its 90% Made in America Guarantee and $82 million through its 90% Grocery Guarantee.

The SBA also announced changes under SOP 50 10 8.1 affecting other lending programs. The updated procedures align acquisition underwriting with commercial practices for owner buyouts and generational transitions, the agency said. The SBA is also updating revolving credit offerings for capital-intensive industries, including the Manufacturers Access to Revolving Credit Loan and SBA Express.