Discover® Small Business WatchSM: Small Business Confidence Rises as Cash Flow Issues Decline

Economy May Be Dampening Independent Spirit

More Say They Would Leave Their Businesses for Higher Paying Job

HEALTHCARE: Small Business Owners Split on Universal Coverage
RIVERWOODS, Ill.--(Business Wire)--
Economic confidence among small business owners rose slightly in June as cash
flow concerns abated and the mood on the economy held steady, according to the
latest Discover® Small Business WatchSM. The monthly index rose to 80.9, up from
78.1 in May.

"Cash flow problems are back to levels that are more in line with what we`ve
typically seen since the Watch began nearly three years ago," said Ryan Scully,
director of Discover's business credit card. "Cash flow concerns usually erode
confidence because they represent something tangible to a business owner, more
so than an expectation or perception about the economy."

June Highlights:

* 42 percent of small business owners say they have experienced temporary cash
flow issues in the past 90 days, down from May`s record high of 49 percent.
* 26 percent believe economic conditions are improving, up from 23 percent in
May, while 57 percent believe conditions are getting worse, which is unchanged
from the previous month; 14 percent said the economy is staying the same, and 4
percent weren`t sure.
* 59 percent of small business operators rate the economy as poor, down 1
percent from May, while 8 percent rate the economy as excellent or good, and 30
percent called it fair.
* 49 percent of owners see economic conditions for their businesses getting
worse, up 1 percentage point from May; 25 percent see conditions improving, also
up 1 percentage point; 22 percent say conditions are the same; and 4 percent
weren`t sure.
* 51 percent of small business owners say they plan to decrease spending on
business development over the next six months, down from 53 percent in May; 22
percent plan to increase spending, and 24 percent are not planning any spending
changes.

POLL: More Say They Would Leave Their Business for Higher Paying Job, Generating
New Business Gets More Challenging

"The economy clearly seems to be taking its toll on the independent spirit of
small business owners," Scully said. "This year 36 percent told us they are
willing to walk away from their own business to earn more money working for
someone else - a jump from 30 percent last year. They are spending much more
time this year trying to find new business and deal with government
regulations."

While independence and flexibility continue to be the main reasons why people
start their own businesses, a sense of accomplishment and needing a job also
gained ground as key motivators compared to the last year:

* 24 percent say they started a business to have more flexibility with their
time, down from 29 percent in June 2008.
* 22 percent cited the ability to be their own boss.
* 15 percent said they wanted a feeling of accomplishment, up from 11 percent
last year.
* 12 percent started their own businesses to make more money.
* 10 percent cited needing a job, up from 7 percent last year.
* 14 percent answered "Some other reason" when asked why they started their
businesses.

When asked about the most challenging aspect of owning a business:

* 40 percent chose finding new business, up significantly from 31 percent in
June 2008 and 28 percent in June 2007.
* 23 percent cited government rules and regulations, up from 13 percent in 2008.

* 11 percent said managing cash flow, a noticeable drop from 19 percent in 2008
and 21 percent in 2007.
* 7 percent said employing good people.
* 4 percent said managing insurance costs.
* 11 percent answered "Some other aspect" and 5 percent weren`t sure.

The source of financial capital for starting their businesses is largely
unchanged over the past three years: 45 percent said they used personal savings
followed by:

* 19 percent, bank loans
* 16 percent, funding from family and friends
* 8 percent, credit cards
* 4 percent, second mortgage or equity loan
* 8 percent answered "Some other way."

Health Care Poll: Owners Split on Universal Healthcare

"While many small business owners feel constrained by the costs of offering
health insurance to their employees, they`re still split on whether they want
the government to get involved," Scully said. "This is a further indication of
their independent streak and their aversion to government intervention in
running their businesses."

Seventy-eight percent of small business owners said they do not offer health
insurance to employees, and they are split on whether America needs a universal
healthcare system: 48 percent of them said the country does not need a
government-run option, 45 percent said it does and 7 percent weren`t sure.

Of those who offer health insurance, 62 percent said a government mandate to
either provide insurance or pay a fee would have a negative impact on their
businesses; 16 percent said the effect would be positive; 11 percent said it
would have no impact; and 3 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 have 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 750 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 2006. In addition to generating the index, the Small
Business Watch surveys small business owners every month on key issues, and
polls 3,000 consumers four times per year to gauge purchasing behavior and
attitudes towards small businesses. For past results and 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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Jon Drummond
Discover Financial Services
224-405-1888
jondrummond@discover.com
or
Daniel Delson
Robinson Lerer & Montgomery
646-805-2036
dmd@rlmnet.com

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