BY KORBETT MOSESLY for WEEKLY VOLCANO | 6/19/2026
The most reliable job-creation engine in any local economy is not a corporate headquarters recruited from out of state. It is the small business already rooted in the community, owned by someone who lives there, hires from there, and spends there.
Local businesses create jobs. They keep wages and spending circulating locally rather than extracting to a distant shareholder. Peer-reviewed research consistently finds stronger local income growth in places with higher densities of small, locally owned firms than in places dominated by large, nonlocal enterprises. The economic case for investing in them is not ideological. It is well-documented.
The problem is that the small businesses with the deepest local roots, those owned by Black, Latine, and Indigenous entrepreneurs, have been systematically denied the capital they need to grow and hire. That is not a gap in ambition or business readiness. It is a documented financing failure. Federal Reserve data shows that firms owned by people of color were roughly half as likely as white-owned firms to receive all the financing they sought, even among lower-credit-risk applicants. Without capital, these businesses stay smaller than their potential. They do not hire. The local economy does not get the jobs.
Washington State built a program to correct that. The Community Reinvestment Program, administered by the Department of Commerce under RCW 43.79.567, combines direct flexible grants to small and minority-owned small businesses with subsidized on-the-job training wages and embedded business navigators inside regional workforce offices. In two years, it reached more than 9,600 businesses, put over $5.6 million directly into community-owned enterprises, and connected 447 workers to work-based training through those same businesses.
The design is straightforward: give community businesses the capital to hire, reduce the risk of bringing on a new worker, and put a trusted person inside the public workforce system whose entire job is bridging that gap. When all three levers are pulled at once, businesses grow, workers get jobs, and the economic activity stays local. Most government programs only pull one lever at a time. That is why they keep getting incomplete results.
The Capital Gap Is Structural, Not Personal
Before the program logic makes sense, the problem it is solving has to be named clearly.
Firms owned by people of color are not less likely to seek capital than white-owned firms. They are less likely to get it. The Federal Reserve’s 2022 Small Business Credit Survey found that applicant firms owned by people of color were roughly half as likely as white-owned firms to receive all the financing they sought, and those gaps persisted even among lower-credit-risk applicants.
For Black-owned businesses specifically, the gap starts at founding. An NBER study on startup capital found that only 1% of Black business owners obtained a business oan in their founding year, compared to 7% of white owners. White-owned businesses borrowed nearly six times as much on average. Black-owned startups compensated by relying more heavily on informal channels, family loans and personal savings, but that substitution is incomplete. It leaves businesses smaller from the start and unable to catch up.
The JPMorgan Chase Institute documents the ongoing pressure: the median small business holds only 27 cash buffer days. For Black and Latine small business owners, who begin with substantially less liquid wealth than white owners, that margin is even thinner, and it persists even among businesses that survive four years.
Policies that rely on owner savings, collateral requirements, or conventional loan access will predictably underserve the entrepreneurs at the center of Washington’s model. That is not a gap in ambition. It is a gap in design. A small, flexible grant aimed at the first hire, a piece of equipment, or a business license is not a side benefit in that context. It is often the missing rung between survival and growth.
Three Levers Pulled at Once
The Community Reinvestment Program model operates through three simultaneous interventions that reinforce each other.
- Direct Business Grants
Black-, Latine-, and Tribal-owned small businesses receive flexible capital, typically $5,000 to $10,000, to cover equipment, licensing, marketing, or a first hire. No credit check. No collateral requirement. The grants are designed to fill whatever gap is keeping a specific business from growing, not to fit a predetermined funding category. In the context of the startup capital data above, a small unrestricted grant is not a side benefit. It is often the missing rung between survival and growth.
- Wage-Based Training Support
The state reimburses a portion of a new employee’s training wages while the worker learns on the job. The business absorbs less risk. The worker earns a real paycheck and builds real skills simultaneously. Both come out ahead, and the job created is attached to a business with roots in the community. The logic is supported by MDRC’s synthesis of 13 subsidized employment programs, which found that nearly all improved employment and earnings in the first year after enrollment, with the strongest gains concentrated among people furthest from the labor market, exactly the population Washington’s program targets.
- Embedded Business Navigators
A dedicated navigator is placed inside the regional workforce office, not as a referral contact, but as a consistent presence whose entire job is building trust with community business owners and connecting them to training programs, hiring pipelines, and public resources they were never designed to reach.
The navigator component is not a soft add-on. It is documented infrastructure. The SBA’s 2024 evaluation of its Community Navigator Pilot Program found it enrolled a higher proportion of underserved clients than traditional SBA resource-partner programs, with more than three-quarters of surveyed clients satisfied or highly satisfied. A 2025 GAO review added critical detail: the most effective navigator programs hired advisors already known and trusted in the local community, used in-person canvassing, and met clients in familiar places, rather than expecting business owners to navigate complex government websites or show up to agency offices. That finding describes exactly the outreach and trust problem that keeps underserved businesses out of public programs.
The business can’t get the full benefit of the investment without participating in the workforce system. The worker can’t get the full benefit without being connected to a real employer ready to hire. The navigator’s job is to make sure neither side falls through the cracks.
Put all three together and the dynamic shifts. The business gets what it needs to grow.
The worker gets a job that pays. The economic activity, the wages spent at the grocery store, the supplier paid, the next hire made, stays in the community where the business is rooted.
What Other Programs Have Tried, and Where They Stop Short
Programs that do pieces of this exist at the federal and state level. None has combined all three elements with equity as the explicit organizing principle.
The SBA Community Navigator Pilot Program validated the value of trusted messengers and community-rooted business support, but it was a technical assistance and resource-connection model with no direct grants and no connection to a worker training pipeline.
The federal Good Jobs Challenge invested $500 million in regional workforce systems built around employer demand, with employers co-designing training and committing to hire completers.
It validated the premise that workforce systems perform better when the employer side is not an afterthought, but it operated through regional partnerships and industry strategies, not through individual minority-owned small businesses as the primary vehicle for inclusive job creation.
State wage subsidy programs are widely available, but in most states they are race-neutral, employer-neutral, and structurally disconnected from any deliberate effort to build wealth in communities that have been systematically excluded.
Washington combined the grant to the business, the wage subsidy for training, and the navigator who connects them, and aimed the whole structure explicitly at businesses that have been locked out of mainstream capital and public-program access. Based on a review of federal and state program models, Washington appears unusual in combining all three elements under one explicitly equity-centered public design. That is the innovation, not any single tool, but the stack.
Why Community Ownership Changes Who Benefits
The equity argument for this model is structural, not rhetorical.
Peer-reviewed research generally finds stronger local income growth from locally owned firms than from absentee-owned enterprises. A study by Fleming and Goetz found that a higher density of small, locally owned firms was positively associated with per-capita income growth, while a higher density of large, nonlocal firms was negatively associated with income growth. A Federal Reserve Bank of Atlanta discussion paper reached a similar directional conclusion. Estimates vary by method and market, but the finding is consistent: where ownership sits matters for local economic outcomes.
The hiring equity dimension is equally important and equally documented. A University of Wisconsin study using multi-city employer survey data found that Black employers were more likely to hire Black workers because they drew more Black applicants and hired from that pool at higher rates than white employers. That is a causal mechanism, not just a correlation. It means that investing in Black-owned businesses as the job-creation vehicle directly changes who gets hired, who builds a work history, and who participates in local economic growth.
For Latine-owned and immigrant-founded firms, NBER research shows that co-ethnic hiring is widespread in new U.S. ventures and is associated with greater venture survival and growth where a local labor supply surrounds the business. For Tribal-owned businesses, federal Native CDFI policy, which already pairs monetary awards with technical assistance as a recognized development strategy, supports the same underlying logic: capital access and community-rooted enterprise development produce jobs and economic stability in communities that have been systematically excluded from both.
Investing in community-owned small businesses as the vehicle for job creation is not a compromise on economic efficiency. It is a more precise instrument for building an economy that works for the people who live in it.
What the Numbers Show, and Where the Evidence Is Still Incomplete
In 2023-2025, more than 9,600 businesses engaged with the workforce system through the Community Reinvestment Program, most for the first time. More than 550 received direct investment: grants, equipment funding, or wage reimbursements. Eighty-five percent were Black-, Latine-, or Tribal-owned. Four hundred forty-seven workers were enrolled in work-based training through those same businesses. More than $5.6 million went directly into community-owned enterprises that created local jobs.
The worker-side outcomes have been formally evaluated. Washington’s 2024 Economic Security for All evaluation, which covers the workforce pipeline that feeds the Community Reinvestment Program, found that participants were 14% more likely to be employed, worked 21% more hours, and earned 27% more per quarter than comparable workers in traditional job training programs. Over two years, Economic Security for All participants earned approximately $12,000 more than the comparison group.
The business-side investment has not yet been formally evaluated with the same rigor. Quarterly reporting shows real results, businesses near closure that are now operating and growing, workers who needed an entry point and got one, community-owned companies building the track records that lead to future investment. But a rigorous study connecting Community Reinvestment Program business grants directly to long-term job creation and wage outcomes has not yet been completed.
That gap matters, and naming it honestly is part of the argument. When that formal study is complete, Washington will have the evidence base to make this a model other states can actually follow, not just a promising regional program.
What Replication Requires
The Community Reinvestment Program model does not require new legislation in states that already have workforce development infrastructure, small business grant programs, or navigator-style intermediaries. What it requires is the political decision to aim all three at the same target, community-owned businesses in communities that have been locked out, rather than running them as separate programs that rarely connect.
Grants without navigators don’t reach the businesses that need them most. Navigators without capital don’t produce growth. Wage subsidies without equity targeting don’t change who gets hired. The three levers only work when they are pulled together.
For Washington, the next investment is the formal evaluation. For other states and local governments considering similar models, the lesson from Washington’s first two years is clear: the combination matters as much as any individual component. The innovation is the stack.
Built With the Communities It Serves
This model is one of 17 programs co-created with communities of color during the Community Reinvestment Program outreach and research phase led by consultant Korbett Mosesly on behalf of the Washington State Department of Commerce. Operational implementation in Pierce County was spearheaded by Samuel A. Bradshaw, team leader and business consultant at the Tacoma-Pierce County Workforce Development Council, whose sustained partnership work between businesses and government made the navigator model function on the ground. For more information about the Community Reinvestment Program or to learn how to apply, visit www.commerce.wa.gov/CRP/
This story was reprinted with permission from Opportunity Links. Learn more at www.olink.news