U.S. small business confidence improved this February for the first time since July, according to Discover's Small Business Watch index.

The index rose to 90.9 in February, up from this January's 86.3. The rise reflects some reassurance in the Federal Reserve's string of interest rate cuts, and the $150 billion stimulus package.

Despite lifting the index, however, 67 percent of respondents believe conditions are getting worse. In addition, 43 percent said they experienced, "cash flow issues," in the last 90 days.

The U.S. economy has been gripped by a housing crisis that has spread into the financial system, denting investor confidence and battering the stock market. The survey pointed to doubts about the effectiveness of government efforts.

More than half of small business owners said they did not expect the rescue package to benefit their firms directly. "The recent state of the economy has been affecting small business owners at work and at home," the report said. "Forty-one percent of owners said current economic conditions have forced them to reduce business spending, and 67 percent reported having to curtail personal spending.

The goal of the stimulus plan is to pump money into the economy, and Washington hopes the tax rebates will be spent as quickly as possible. Of 4,000 consumers polled separately by Discover, 59 percent said they expect to receive a rebate under the package. Of those, 53 percent planned to spend it and 33 percent planned to save it.