Banking on the man from Hope: small black-owned businesses are looking to the Clinton Administration to help open access to much-needed capital - B.E. Report on Small Business; includes related article on five industries with the greatest potential for growth: health care, communications, technology, environment and specialized services and; includes list of business service organizations

The 1993 budget compromise also creates nine "empowerment zones" in six cities and three rural areas, at a cost of $2.5 billion in tax incentives and $720 million in grants for eligible businesses in the designated areas. On a smaller scale, the plan also created 95 additional "enterprise communities," 65 in urban areas and 30 in farm country, which will share $280 million in grants.

The plan stresses hiring people who live in the zones, rather than helping them and other disadvantaged people create new businesses. "These are basically tax incentives going to major corporate entities," says minority-business advocate Anthony Robinson of the MBELDEF. "I don't see [these zones] benefiting minority businesses."

Nevertheless, enterprise zones are popular with many states and communities. Their advocates strongly believe that they are beneficial to community businesses. The Denver Enterprise Zone, created by the state in 1986, encompasses an inner-city neighborhood called Five Points and has fostered the development of minority businesses, creating "hundreds of jobs" in its small-business incubator, according to Robert Ortlip, the zone's administrator. "There are no big employers in Five Points, but there are a lot of small businesses, and in those areas there's been a lot of job creation," he says.

Clinton's program for small business also calls for an accounting change, allowing them to write off investments of up to $17,500 in equipment purchases, rather than depreciating them. "That's a real benefit to us," says Kathy Kendrix of K and k Consultants, a public relations firm in Portland, Ore. Although her fledgling, home-based enterprise only has sales of about $25,000, she notes that, "We have a lot of equipment - computers, telephones, fax machines - and the tax credit is important to us."

Clinton's reform plan also extends the tax credit for employers who hire the disadvantaged. But these boons to struggling businesses come at the expense of successful ones. The budget compromise's huge tax increases raise the current maximum personal tax rate of 31% to as much as 39.6% on incomes over $250,000. This could jump as high as 44%, if you factor in the loss of certain deductions for individuals in this income bracket.

Clinton has cast the increases as falling on the wealthy, emphasizing that the corporate rate was raised only one point, to 35%. however, the fact is that two-fifths of all American businesses, or 1.6 million, file as sole proprietorships, partnerships and Subchapter S corporations. Their owners pay business taxes as individuals - and higher taxes mean less cash to invest in the business. The administration acknowledges that 300,000 small businesses will see their taxes raised.

"I'm not rich," says Dwight Redd, president of Criticare Professional Nurses Inc. in Billings, Mont., and one of only 6,000 African-Americans in that state. Profits on his $1.3-million business, combined with his wife's income as a nursing coordinator at a hospital, propel him into Clinton's new top bracket. "But that's not really my income," he protests. "Most of the profits of the company need to be reinvested." Converting his incorporation from Subchapter S to the conventional C form wouldn't help: "Then I've got double taxation, first on the business and then on me," he notes.