By Rob Kaiser

Optimism among small-business owners surged in August, as firms plan to hire more workers and boost spending on new equipment and other items, according to a monthly survey by the National Federation of Independent Business.

The optimism index, which considers a range of factors, from sales to expectations for the economy, increased to 104.7 in August, with a 4.1 point gain. That increase was the largest one-month jump since the survey was started in 1986.

Still, the study found that plans to increase capital spending, invest in more inventory and hire more employees have yet to widely turn into action.

"The 'tone' is terrific, but the dollars haven't caught up with the music," said William Dunkelberg, the federation's chief economist, in a survey report.

Forty-two percent of the 544 firms surveyed expect the economy to strengthen during the next six months, while 10 percent expect it will become weaker.

President Bush's economic policies still have support among small business owners, but the support is slipping. Forty-eight percent of those surveyed ranked his economic policy a "1" or "2" on a five-point scale, where "1" is excellent. That ranking is down three percentage points from July. Nine percent of the business owners gave his policies a "5" (poor) ranking, up one percentage point.

Tax credit sought for reservist loss

Sen. John Kerry of Massachusetts, a Vietnam veteran who is running for the Democratic nomination for president, has introduced legislation that would give tax credits to small firms with reservists who were called up for active duty.

Under the Small Business Military Reservist Tax Credit Act, firms with 50 employees or less could get up to $12,000 in tax credits. Half of the money could be used to cover the reservist's salary, and the other half could be used to help hire and train a replacement.

Small manufacturing companies with less than 100 employees could get up to $20,000 in tax breaks. Again, the money could be split to support the reservist's salary and find a replacement.

Todd McCracken, president of the National Small Business Association, said small businesses are affected by the loss of an employee more than large firms.

Online seminars assist marketing

The Small Business Administration and a San Francisco company are offering a series of free online seminars to help firms development e-mail marketing strategies.

Topica Inc. developed the seminars with the SBA for small and medium-size businesses as well as e-commerce firms.

The next seminar is set for Oct. 8. To register, visit