Small-business owners’ confidence fell again in July as fears about the economy entering another recession rose, the results of a survey Discover Financial Services released July 26 suggest.

The Discover Small Business Watch declined by 3.1 points, to 83 from 86.1 in June.

The Business Watch is a monthly report measuring the relative economic confidence of 750 randomly selected small-business owners based on their responses to six questions. Its creators established a base index of 100 when the Watch began in August 2006.

Some 75% of business owners said they believe it is likely or highly likely the economy will slip into another recession before it fully recovers, with 15% believing another recession is not very likely and 10% saying they are unsure.

In July, 58% of small-business owners rated the economy as poor, up from 51% who did in June, while 7% rated the economy as excellent or good, down from 12%.

Cash-flow problems plagued fewer business owners in July, as 49% said they did not encounter any temporary cash-flow issues, compared with 45% who said so in June. Some 47% of business owners had cash-flow issues in July, down from 51% last month.

“Even though cash-flow issues eased off in July, small-business owners still aren’t feeling any positive effects from anything going on in the bigger economy,” Ryan Scully, Discover business card director, said in a statement. “They’ll be holding back their economic enthusiasm until they have tangible evidence that their bottom lines are improving.”

Some 45% of business owners in July said economic conditions were getting worse, up from 43% who said so in June. Thirty percent said economic conditions were better, while 22% said conditions were the same and 3% were unsure.

Take-home pay continues to decrease, as 73% of small-business owners said economic conditions caused them to take home less money in July, a record for the Watch. In a similar poll a year ago, 69% of business owners said they were taking home less pay because of the economy.

Fewer business owners are leaning on credit, as only 10% of small-business owners said they applied for new credit cards, lines of credit or loans within the past three months, down from 17% who said so in July 2009; 89% did not apply, and 2% were unsure.

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