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U.S. Bank Small Business Survey Shows Minnesota Small Business Owners Believe Economy is in Recession, but Feel They Have Access to the Credit They Need

Businesses Also Show Signs of Optimism Despite Fuel, Housing Concerns

MINNEAPOLIS--(BUSINESS WIRE)--July 9, 2008--Nearly three-quarters (74 percent) of Minnesota small business owners believe the economy is in a recession, and nearly half (46 percent) report lower revenues this year compared to 2007, according to the U.S. Bank Small Business Survey in Minnesota conducted statewide in June.

Despite this, most Minnesota small business owners (78 percent) also say that the availability of loans or credit has had a positive or no impact on their businesses. Among those small business owners who indicated they wanted to access credit for their businesses, 73 percent characterized the securing of loans as "easy" or "very easy," with 27 percent saying it was "difficult." Similarly, 73 percent say that interest rates have had a positive or no impact on their businesses.

"Even though the Federal Reserve would technically say we are not in recession, Minnesota's small business owners are saying we indeed are," said Rick Hartnack, vice chairman of U.S. Bancorp. "Even so, they are also confirming what we at U.S. Bank have been seeing for some time - there is no credit crunch for small businesses, which is good news for Minnesota."

When asked to describe the current economic conditions for small businesses in Minnesota, only 21 percent said conditions were "excellent" or "good" (3 percent and 18 percent, respectively), while 39 percent said they were "fair" and 38 percent said "poor."

Not surprisingly, fuel prices have had a measurable effect on small businesses, with 85 percent of business owners indicating that gas prices have had a negative impact on their small businesses with nearly two-thirds of respondents saying the impact has been "very negative." After fuel prices, the second most unfavorable economic factors for small business owners were state and local taxes (listed as negative by 48 percent of respondents), federal taxes (41 percent) and the housing market (40 percent). "Gasoline prices, food prices. The market is just terrible," noted one business owner.

Among the nine economic factors that business owners ranked for their impact, the two factors that stood out as the most positive were interest rates and the availability of credit. Twenty-four percent of business owners felt that interest rates were a benefit of the current economy while 18 percent thought the availability of loans and credit were economic bright spots. Only five percent characterized the availability of loans as having a "very negative" impact.

"The media attention about tight credit in the housing market simply doesn't translate to the business market," said Hartnack. "Minnesota small business owners are savvy and know there are a range of credit options available to them, from direct loans to business credit cards and federal loans."

Great rates for those in need

Drilling deeper into the survey data also shows that the small business owners who said they need credit or loans were satisfied with the current market. Thirty-three percent of respondents who said they need credit for their business felt positive about current interest rates. Thirty-six percent of business owners who indicated they found it easy to borrow money also listed interest rates as a positive factor.

Twin Cities-based small businesses tended to report easier access to credit than businesses in the rest of the state. Some 37 percent of Twin Cities-based small businesses indicated access to credit was "easy" compared 26 percent for businesses in the rest of the state. Businesses in operation for 15 years or more were also more likely to report credit as "very easy" to obtain compared to those in business less than 15 years (20 percent and 13 percent, respectively).

Business owners also were guardedly optimistic that overall economic conditions will improve next year, with 50 percent of those reporting lower revenues in 2008 as in 2007 saying they expect their revenues to maintain or improve in 2009.

U.S. Bank has 71,116 small business customers in Minnesota, and has added 1,690 new small business customers in the state in just the last year. The growth is thanks in large part to a renewed focus on small businesses through U.S. Bank's PowerBank program, which added small business loan officers and operations capacity in the Twin Cities metropolitan area. Over the past 12 months, U.S. Bank has loaned more than $161 million in new money to Minnesota small businesses, a number that continues to grow. Additionally, figures released by the Minnesota office of the U.S. Small Business Administration (SBA) shows that as of June 30, 2008, U.S. Bank continues to be the number one SBA lender in the state, with 293 loans to-date.

Methodology

The telephone survey of 401 small businesses with annual revenues less than $10 million was conducted by KRC Research between June 10-19, 2008. The estimated margin of error at the 95 percent confidence level for proportions near 50 percent was +/-4.9 percent. Additional information on the statewide survey is available upon request.

About U.S. Bank

With $242 billion in assets, U.S. Bancorp (NYSE: USB) is the parent company of U.S. Bank, the 6th largest commercial bank in the United States. The company operates 2,522 banking offices and 4,844 ATMs, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. In Minnesota, U.S. Bank operates 127 bank branches and 570 ATMs, has 10,098 employees and maintains a 15.4 percent market share in the state. Visit U.S. Bancorp on the web at www.usbank.com.

CONTACT: U.S. Bank Media Relations
Steve Dale, 612-303-0784
steve.dale@usbank.com
or
Weber Shandwick
Nora Hayes, 952-346-6164
nhayes@webershandwick.com

SOURCE: U.S. Bank

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding U.S. Bancorp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.



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