Discover® Small Business WatchSM: Small Business Economic Confidence Jumps as More Owners See Conditions Improving for Their Businesses

TAXES: 85% of Small Business Owners Expect to Earn Less than $250,000;
Self-Employment Tax Voted as the Most Frustrating

RIVERWOODS, Ill.--(Business Wire)--
Economic confidence among small business owners saw its largest jump in
confidence in nine months as fewer owners see the economy getting worse and more
believe conditions are improving for their own operations, according to the
latest Discover® Small Business WatchSM. The monthly index increased more than
six points, rising to 78.2 in March from 71.9 in February.

"Increased confidence in economic conditions is definitely a bright spot in an
otherwise bleak business environment," said Ryan Scully, director of Discover's
business credit card. "Small business owners are far less bleak about the
direction of the overall economy than they have been in months."

The number of small business owners who say the economy is getting worse dropped
to 60 percent, down from 69 percent the previous month and significantly below
the all-time high of 79 percent reached in June 2008. Those who see the economy
getting better rose from 12 percent to 16 percent.

March Highlights:

24 percent of owners see economic conditions for their businesses improving, up
from 19 percent in February and the highest response in this category since
August 2008. Similarly, 47 percent see conditions getting worse, down from 54
percent in February.

* 41 percent of owners say they have experienced temporary cash flow issues over
the past 90 days, basically unchanged from 42 percent in February.
* Views of the current economy remained constant: 90 percent rated the economy
as fair or poor in March, unchanged from February.
* 48 percent of owners say they plan to decrease spending on business
development over the next six months, a drop from 51 percent in February; while
21 percent plan to increase spending and 29 percent will make no changes.

85% of Small Business Owners Expect to Earn Less than $250,000

An overwhelming majority, 85 percent, of small business owners said their income
would fall below $250,000 and would not be subject to a tax increase proposed in
the Obama administration`s new budget.

However, they were split on the fairness of that threshold on small business
owners: 44 percent said it was fair, 46 percent called it unfair, and 10 percent
weren`t sure.

The Most Frustrating Tax

When asked which taxes frustrate them the most as a small business owner, 32
percent said self-employment taxes, followed by:

* 24 percent - federal income taxes
* 11 percent - real and property taxes
* 9 percent - the employer`s contribution to an employee`s Social Security tax
* 3 percent - unemployment taxes
* 3 percent - state income taxes
* 2 percent - sales taxes
* 0 percent - excise taxes.

Seventeen percent weren`t sure which taxes frustrated them the most.

Preparation and Documentation Remains Time Consuming

More than three-quarters, 77 percent, of small business owners say that the tax
preparation and documentation process is very or somewhat time consuming, an
increase from 75 percent a year ago. Likewise, 46 percent of owners say that
finding and organizing the documents they need to prepare their taxes is very or
somewhat difficult, an increase from 41 percent a year ago and 39 percent in
March 2007.

"For the third straight year, we see that tax preparation and the process
involved remains a significant distraction for small business owners, who often
need to devote large amounts of time to getting organized and cutting through
the complexity of the tax code," Scully said.

Other Tax Poll highlights:

* 74 percent of small business owners have business income reported as part of
their personal income taxes and 22 percent are taxed as corporations.
* While 69 percent of small business owners will still turn to professionals for
tax help, do-it-yourself tax software gained popularity this year: 21 percent
plan to use a computer software program, up from 15 percent a year ago.
* But no matter who does their taxes, nearly a third of small business owners,
32 percent were not very confident or not at all confident that they will
receive all of the deductions to which they are entitled.
* 38 percent of small business owners are expecting a refund, 21 percent plan to
break even, 36 percent expect to pay taxes and 5 percent aren`t sure.
* Among those expecting a refund this year, 41 percent of owners said they will
use it to repay debts, 22 percent will use if for their businesses, 21 percent
will save for the future, 14 percent will use it for personal purposes, and 2
percent weren`t sure.

The views and opinions expressed by small business owners and consumers who
participate in the Small Business Watch survey are their own and do not
necessarily reflect those of Discover Financial Services or its affiliates.

About the Small Business Watch

The Discover Small Business Watch is a monthly index measuring the relative
economic confidence of U.S. small business owners who employ less than five
employees, a segment that consists of 22 million businesses producing more than
a trillion dollars in annual receipts. The Watch is based on a national random
survey of 1,000 small business owners. It is commissioned by the Discover
Business Card, which strives to offer the best business credit card for American
small businesses, and is conducted by Rasmussen Reports, LLC
(www.rasmussenreports.com), an independent survey research firm. The numeric
index is calculated by assigning values to responses to a set of six consistent
questions. The base value of the Watch was established at 100.0 based on surveys
conducted in August of 2006. In addition to generating the index, the Small
Business Watch surveys small business viewpoints on key business drivers, and
also surveys 4,000 consumers to gauge purchasing behavior and attitudes towards
small businesses. For past results and small business survey data, visit
www.discovercard.com/business/watch. For information on Discover Business Card,
visit www.discovercard.com/business.

About Discover Financial Services

Discover Financial Services (NYSE: DFS) is a leading credit card issuer and
electronic payment services company with one of the most recognized brands in
U.S. financial services. Since its inception in 1986, the company has become one
of the largest card issuers in the United States. The company operates the
Discover Card, America's cash rewards pioneer, and offers student and personal
loans, as well as savings products such as certificates of deposit and money
market accounts. Its payments businesses consist of the Discover Network, with
millions of merchant and cash access locations; PULSE, one of the nation's
leading ATM/debit networks; and Diners Club International, a global payments
network with acceptance in 185 countries and territories. For more information,
visit www.discoverfinancial.com.

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Discover Financial Services
Jon Drummond
224-405-1888
jondrummond@discover.com
or
Robinson Lerer & Montgomery
Daniel Delson
646-805-2036
dmd@rlmnet.com

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