DISCOVER® SMALL BUSINESS WATCHSM:

SMALL BUSINESS ECONOMIC CONFIDENCE REBOUNDS AFTER

RECORD-LOW

Owners Express Increased Optimismaboutthe U.S. Economy and Economic Conditions for Their Business; Cash Flow Issues Improve Significantly

POLL: Owners Feeling the Effects of Housing and Credit Market Turmoil

Forty-Three Percent Say Their Business Will Suffer If Getting Credit

Becomes More Difficult

Riverwoods, IL, July28, 2008 –After sinking to its lowest level in June, economic confidence among small business ownersrebounded in July, as the number of those who said they are experiencing cash flow issues decreased significantly and general economic confidence began trending upward. The Discover® Small Business WatchSMjumped inJulyto 84.6, up12.8 points from 71.8 inJune.

“Based on the results we’ve seen over the past six months, cash flow is one of the key indicators that affects small business owners’ confidence in the economy,” said Ryan Scully, director of Discover’s business credit card. “Giventhe substantial decrease in cash flow concernsthat were reportedthis month, it’s not surprising that economic confidence also rebounded with a double-digit increase.”

JulyKey Findings:

  • 33 percent say they have experienced cash flow issues over the last 90 days, a significant decrease from 42 percent in June.
  • 17 percent of small business ownersthink the U.S. economy is getting better, an increase from nine percent in June.
  • 28 percent of owners say that economic conditions for their business are getting better, an increase from 23 percent in June.
  • 17 percent rated the economy as good or excellent, an increase from 12 percent in June.
  • 29 percent of owners will be increasing spendingover the next six monthson business development activities such as advertising, inventoriesand capital expenditures, up from 23 percent in June. Thirty-nine percent plan to decrease spending.

POLL: Some Owners Feeling Effects of Housing and Credit Market Turbulence

Approximately four-in-ten small business owners (42%) say that the nationwide downturn in the housing market has had a negative impact on their business, while 47 percent say it has not negatively affected them.

The Watch also regularly tracks trends in how small businesses are using credit with their customers and the rate of delinquencies they are seeing. This month, 27 percent of owners said they extend credit to their customers and70 percent of this group indicated that their customers have delayed a payment or asked to delay a payment in the past three months. Slightly more small business owners – 32 percent – were extending credit to customers in April 2008; however delayed payments and requests for extensions that month were higher, at 73 percent. In September 2007, 30 percent of small business owners were extending credit to their customers and 64 percent received delayed payments or requests to delay payments.

“As shifts in the housing and credit markets continue to impact consumers’ spending habits, small business commercewill likely experience aslowdown as a result,” said Scully. “The good news is that even though small business owners are seeing customers delaying their credit payments, it doesn’t appear to be having a negative impact on their cash flow.”

Additional highlights:

  • 43 percent of owners say that if obtaining credit becomes more difficult, it will have a negative impact on their business. This is significantly higher from the 35 percent who said the same in August 2007.
  • 14 percent of small business owners have applied for a loan or line of credit in that past three months.
  • 72 percent of owners say that the government’s economic stimulus efforts have not had any impact on the profitability of their business.
  • 54 percent of consumers say that now is a good time to buy real estate.

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 ( 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 For information on Discover Business Card, visit

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. The company operates the Discover Card, America's cash rewards pioneer. Since its inception in 1986, the company has become one of the largest card issuers in the United States. 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

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Contacts

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Jon Drummond

Discover Financial Services

224-405-1888

Daniel Delson

Robinson Lerer & Montgomery

646-805-2036

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