Optimism Continues to Fall for Small Businesses

Optimism about the economy among the country's small businesses slipped in February as owners reacted to a raft of bad news, the National Federation of Independent Business said in a survey released earlier this week.

The NFIB said the index of small business optimism edged down 1.5 percent to 82.6 in February from the previous month.

"Reports of modest increases in earnings and sales measures were good news for owners, though likely only temporary, but it is clear that the first quarter of 2009 will be as bad as the fourth quarter of last year," said NFIB Chief Economist William Dunkelberg.

Over the next three months, owners will continue to shed jobs and pull back on compensation, which will help to keep a lid on labor costs, the survey said.

Because of the slowdown in the economy, the creditworthiness of many potential borrowers has deteriorated over the last year, leading to more difficult terms and higher loan rejection rates, even with no change in lending standards, the report added.

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