Operating a small business has never been without its challenges. But COVID-19 shone a light on some glaring disparities, as the businesses hit hardest during the pandemic have been those owned by people of color, immigrants and women.

A 2020 study by the Federal Reserve Bank of New York found that, at the height of the pandemic, Black-owned businesses were nearly twice as likely to close than businesses with white owners. Meanwhile, 32% of Latino-owned businesses and 26% of Asian-owned businesses shuttered in 2020.

Access to capital is part of the problem: Black and Latino business owners are less than half as likely to have access to business loans than white owners.

We believe that government and business can work together to address these disparities and fuel a more equitable economy. A successful example of this is the Small Business Flex Fund, which was launched by the Washington State Department of Commerce in June and has provided more than 350 business with low-interest loans of up to $150,000. Nearly 80% of those loans have gone to businesses and nonprofits with diverse ownership, though any Washington business with fewer than 50 employees and annual revenues of less than $3 million is eligible.

The fund represents an innovative collaboration between business and government. It began with a $30 million seed investment from the Department of Commerce and has received subsequent private-sector investments from Umpqua Bank, Heritage Bank, JPMorgan Chase and WaFD Bank. The fund’s current total is $85.5 million, closing in on its stated $100 million goal. Community Development Financial Institutions, including National Development Council (also the fund administrator), are the nonprofit lenders within this program, and their work serving underbanked communities makes them ideal partners for small businesses and nonprofits.

This structure can be used to support organizations beyond COVID-19, and this type of partnership model could be applied to other systemic issues.


While the program was an immediate response to pandemic recovery, its intention is to provide working capital for businesses to grow and thrive. Many of the lenders who are working with the Flex Fund have provided financial mentorship, access to the Paycheck Protection Program and rental assistance. If a business doesn’t initially qualify for a loan, Flex Fund lenders will work with them to apply more successfully a second time.

One of the first Flex Fund recipients was Causey’s Learning Center, a preschool in central Seattle. When the pandemic hit, the center lost nearly half its staff, and enrollment decreased by 80%. Executive director Ruth Brown had been hesitant to take out a loan because, as a Black business owner, she had been rejected by lenders in the past.

“So many times, when you are a person of color, when they see you, they don’t believe in you,” Brown said.

But when she was pointed in the direction of the Flex Fund, she was able to secure a loan, and now Causey’s is increasing enrollment and looking for a larger facility.

Skyhawk Press, an apparel printing shop in Poulsbo, also took advantage of a Flex Fund loan. Its revenue fell by 90% at the beginning of the pandemic, but with a Flex Fund loan, they are going strong again in 2022.

These success stories were the result of the unique partnership that is the Small Business Flex Fund. Because 40% to 60% of all small businesses fail without technical assistance (and those numbers were no doubt exacerbated by COVID-19), it’s time to reflect on what we’ve learned during the pandemic and to encourage more innovative public-private partnerships. It can only lead to a more equitable recovery process and a more vibrant Washington economy.