Small business owners are seeing some signs of improvement in the overall U.S. economy but that optimism is tempered by their concerns about a general sense of uncertainty as the economy slowly works its way out of the recession.

On the bright side, most of the nearly 3,000 small business owners queried in U.S. Bank's annual Small Business Survey said their overall job outlook is stabilizing and their perceptions of banks has improved significantly in the past year.

Perhaps most telling is the fact that regardless of industry, small business owners are embracing social networking and other technology tools with vigor to boost sales, improve efficiencies and create greater awareness of their products and services.

"We are heartened to see the outlook improving, but there is still work to do," Rick Hartnack, vice chairman and head of U.S. Bank's consumer and small business unit, said in the report. "Small business owners are starting to see the recessionary clouds part, but for many the recession remains."

One of the biggest concerns voiced by small business owners throughout the years-long recession has been the tightening of credit that's made it difficult for companies to reduce pressure on its operation cash flow to hire more workers, buy products and expand their sales and marketing endeavors.

Hartnack said this year's survey, which polled 2,923 small business owners operating companies with less than $10 million in 10 different states, indicates that banks are starting to assuage some of those lending concerns.

"Out branches increased small business loans outstanding by more than 22% year-over-year," he said. "We hired an additional 150 small business specialists in key markets and we're still hiring today. Things are starting to improve, and for the thousands of small businesses that will help our economy grow, and we are ready to support them."

While that may be true, most small business owners still think the U.S. economy is in a recession (78%), down from 89% in last year's survey. And most small business operators said the state in which they do business is enduring even harder economic times than the country as a whole.


Yet, 64% of companies are predicting their 2011 sales will be the same or higher than last year and only 10% are expecting sales to decline from last year.

Seventy percent of small businesses expect to maintain their current staffing levels for the next year and 22% said they plan to hire more employees.

When asked what was the most significant challenge facing their business today, 27% of proprietors identified "economic uncertainty," followed by "poor sales" (16%), federal regulations (12%), competition (9%) and taxes (8%).

Only 20% of firms queried either borrowed or tried to borrow money over the last six months.

The most significant change in small business operations and strategies this year was the rise in both popularity and usage of social networking sites to generate business and recruit talent. Thirty-nine percent of small businesses are now using some form of social media on a daily basis, up from 32% last year.

Facebook (74%) and LinkedIn (57%) led the social media charge but industry-specific sites (26%) and Twitter (23%) were also in the mix.

Finally, small business owners said they wanted more personalized service and support from their banks and improved consultation from small business banking specialists.

The percentage of small business owners who said they viewed their banks as "helpful" increased to 43% this time around, up from 36% last year.

Earlier this spring, a Wells Fargo/Gallup Small Business Index, which combined the sum of small business owners' present situation and future situations to derive a composite score, checked in at a score of 12 with small business owners rating their present situation as a -10 and their future expectations at 22.