Optimism about the economy is growing and recession fears are shrinking among small business owners, according to the Capital One Small Business Growth Index released today.

While the respondents paint a mostly rosy picture, the upcoming presidential election and taxes are still worrisome, according to responses from 500 business owners with less than $10 million in annual revenues. The index survey is conducted twice a year.

Nearly two-thirds (64%) of small business owners said business conditions are good or excellent, while 43% said they are concerned that a recession will impact the success of their business in the next year. The percentage feeling optimistic increased five percentage points and recession concerns decreased six points over the last six months, the study said.

"We have been working with small business owners for a long time and know this population well. Even so, we continue to be struck by their resilience. While some small business owners are expressing real concerns over a potential recession, they aren't allowing this kind of speculation to dampen their efforts to grow or invest in their businesses," Jenn Flynn, head of small business bank at Capital One, said in a statement. "Small business owners are cautiously optimistic—they are holding to their financial forecasts, still planning to hire and still investing."

Although most small business owners are not predicting a near-term recession, 85% said their businesses would be impacted if the economy did enter a recession. If it occurred, business owners said they would have to be more conservative when it comes to inventory and supplies. They also said a recession would negatively impact their cash flow, cause a decrease in sales or impact their ability to grow and expand.

Breaking down the potential cash flow problems, 32% said they feel fully prepared for a potential recession, while 42% feel slightly prepared and 24% feel either not very prepared or not prepared at all. Women (49%) are more concerned about a potential recession than men (40%).

The 2020 presidential election also concerns a majority of the respondents. Nearly two thirds (65%) said the election will have an impact on their company, and 55% said policies that impact businesses are top of mind. In particular, small business owners are concerned about taxes, keeping up with the competition and staying on top of technology. Although overall optimism has seen an uptick in the last six months, only 36% of business owners think their business will be in a better financial position six months from now, which is a decrease from the 44% who said the same last spring.

"It is an interesting point in time, as the economy continues to be relatively strong and optimism remains steady, many still feel concerned about a potential recession and are uncertain about the impact of the 2020 presidential election," Brad Jiulianti, head of the small business card at Capital One, said in a statement.

Despite some misgivings, most business owners reported having steady hiring practices, which rely on increased salaries to recruit new employees. Thirty percent said they plan to hire in the next six months, which is consistent with the 29% who had similar plans in the spring. Businesses owned by millennials, minorities and women are more likely to have plans to hire than other segments.

Business owners also are concentrating on attracting and retaining customers. Thirty-six percent said they have a mission-driven or community-impact initiative in their companies, such as donating money to local causes, volunteering or focusing on pro bono work. Twenty-nine percent report they have green or recycling programs, and 27% enable customers to donate to causes as part of doing business with them, all of which have a positive impact on their businesses.