Research was conducted to define methods for creating jobs for urban youth through small business expansion, particularly in Chicago. This report presents recommendations derived from the research. The first section suggests ways of increasing the effectiveness of Chicago's small business/neighborhood economic development efforts. The second section summarizes the experiences of other states and cities in targeting their public capital toward community development and small business growth. The role of the State government in small business is addressed in the third section. The fourth section analyzes shortcomings in the existing Federal incentives which encourage small business to hire disadvantaged, hard-to-employ workers in the Chicago area. (MK)