The economic outlook among small-business owners across the nation improved in February, prompting many to boost spending plans for the months ahead, according to the Discover Small Business Watch.

Discover's monthly index rose in February to 90.9, a 4.6-point increase over January's 86.3 with noticeable changes in how small-business owners view the overall economy and the conditions for their own businesses.

In a survey of 1,000 owners nationwide, 34 percent said they see economic conditions for their businesses getting better over the next six months, up from 31 percent who felt the same in January.

"Small-business owners are seeing some of the larger efforts being made to improve the economy, such as the Fed interest rate cuts and slowing down of downward momentum," Sastry Rachakonda, the director of Discover's business credit card, said in a statement.

Rachakonda said the upturn in confidence was prompting more owners to start investing again in their businesses. Thirty-three percent of owners polled said they planned to increase spending on business development, up from 28 percent.

Yet major economic concerns still loom for many.

A heavy 67 percent of respondents felt that economic conditions are getting worse, and 43 percent said they have experienced "cash flow issues" over the last 90 days.

Slightly more than half (51 percent) of small business owners said their businesses generally rise and fall with economic conditions in the country. The recent state of the economy has been affecting these business owners at work and at home:

• Forty-one (41) percent of owners said current economic conditions have forced them to reduce business spending;
• Sixty-seven (67) percent reported having to curtail personal spending; and
• Fifty-five (55) percent have been forced to reduce the amount of money they take out of their businesses.

Further, the survey points to doubts regarding the effectiveness of government efforts to stem the housing crisis that has spread deep into the financial system, denting investor confidence and battering the stock market.

Fifty-nine percent of small-biz owners said they believe that Congress' recently passed $168 billion economic stimulus package will not have a significant impact on their businesses directly, according to Discover's poll.

"Small business owners have to be enormously flexible to manage through adverse business circumstances," Rachakonda said. "Business owners will do whatever it takes to keep their businesses going."

Fifty-four percent of small-biz owners expect to receive a rebate as a result of the federal stimulus package, and two out of three of those people plan to put it to personal use (48 percent) or add it to their savings (25 percent).

Of 4,000 consumers polled separately by Discover, 59 percent said they expect to receive a rebate under the package. Of those, 53 percent planned to spend it, 33 percent planned to save it and 14 percent were not sure how they would use it.