However, the Federation of Small Businesses said firms in Scotland still face challenging conditions with seven in 10 complaining credit is hard to obtain.
Research for the latest Voice of Small Business Index by the FSB found confidence has risen to the highest level since the start of 2010 in Scotland, following the fourth successive improvement in sentiment.
With 40% of respondents reporting an increase in revenues, the FSB found growing numbers of firms are operating at above capacity. Around 30% expect to increase investment over the next year.
While confidence levels in Scotland are lower than across the UK, the FSB said the latest results suggest a fledgling Scottish small business recovery is underway.
"Increased revenues and reduced levels of spare capacity suggest that firms are busier than they have been for a long time," said Andy Willox, the FSB's Scottish Policy Convener.
However, Mr Willox said profitability is still weak and firms' growth prospects are threatened by rising costs.
The FSB said affordability of finance has eased marginally, but 71.6% of respondents said the availability of credit is poor. A net balance of 24% of respondents in Scotland said they were more confident than in the previous quarter, compared with 33.5% in the UK.