Small business owners' economic confidence fell for the second month in July as a higher percentage of small business owners rated the current economy as poor and see it only getting worse, according to the Discover Small Business Watch.

The index dropped to 83 in July from 86.1 in June. It has been below 83 only once since the beginning of the year.

In July 58% of small business owners rated the economy as poor, up from 51% in June, while 7% rated the economy as excellent or good, down from 12% in June.

"Even though cash flow issues eased off in July, small business owners still aren't feeling any positive effects from anything going on in the bigger economy," said Ryan Scully, director of Discover's business card, who commissions the monthly research. "They'll be holding back their economic enthusiasm until they have tangible evidence that their bottom lines are improving."

Results of a separate poll conducted by Wells Fargo/Gallup shows that while concerns about credit availability may have stabilized, fewer U.S. small business owners expect revenues, cash flow, capital spending and hiring to increase over the next 12 months. According to the latest Wells Fargo/Gallup Small Business Index, conducted in July, the lower expectations for business prospects contributed to a 17-point decline from April in the survey's index of business owner confidence, finishing at (-28), the lowest score since the survey's inception.

"The weakened economy has been particularly hard on small businesses and our bankers are making every effort to help them through this period with financial solutions and guidance," said Marc Bernstein, executive vice president and Wells Fargo's head of Small Business. "We grew small business lending by 30 percent over the previous quarter and -- in an effort to increase approvals -- took a 'second look' at declined applications, while continuing to apply our disciplined credit and underwriting principles."

Although it wasn't part of the confidence index calculation, according to Discover 75% of small business owners believe it is likely or highly likely that the economy will slip into another recession before it fully recovers, with 15% believing another recession is not very likely to happen and 10% feeling unsure.

Other July Confidence Indicators released by Discover include:

28% of small business owners reported they will increase spending on business development over the next six months, up from 25% in June and the most since September 2008.

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