ent-confidence.jpgDiscover Small Business Watch's monthly survey of small business owners finds that, after a few months of rising expectations, their economic confidence is facing a dimmer reality.

Cash-flow concerns and lower business development spending contributed to a 10-point drop in the Discover Small Business Watch index, which fell to 78.1 for the month of May.

"We saw cash flow problems jump this month to their highest level in 2½ years, which is certainly not going to boost the optimism of a small business owner, especially in this economic climate," states Ryan Scully, director of Discover's business credit card.  "However, for the past three months we've been recording our highest confidence levels since summer of 2008, so all is not lost."

About 49 percent of survey respondents reported cash-flow issues in May, the highest number since the report launched in 2006. Nearly half of the respondents reported economic conditions for their business were worsening in May. About 57 percent think the economy is getting worse.