A good indicator of economic growth is often credit growth among small businesses, and in the United States these businesses see better days with lending to SMEs increasing by 14 percent, according to the Thomson Reuters/PayNet Small Business Lending Index.

But in Australia, small businesses are shying away from obtaining lines of credit as borrowing rates remain higher than average. Credit growth has been slow and economic growth overall is predicted to moderate over the next quarter, influencing the Reserve Bank's recent decision to lower the official cash rate on Tuesday.

The rate was cut from 4.75 to 4.5 percent in an effort to stimulate consumer spending, which has been conservative of late. Indicating this conservative behaviour is Dun & Bradstreet's most recent Consumer Credit Expectations Survey that reveals only 20 percent of consumers intend to apply for new credit in the December quarter, down from a peak of 33 percent in mid-2009.

This pessimistic credit sentiment is reflected in many small businesses, which often operate as sole traders. In Western Australia, for example, almost a third of small businesses are sole traders. Turning away from credit indicates that these businesses are setting themselves up for a tough quarter ahead, which is unusual given that it is around Christmas time where firms see the most financial activity.

D&B's Business Expectations Survey for the December quarter reveals exactly this- more than 50 percent of the firms surveyed expect demand and sales to slow over the next 12 months as a result of the knock on effects of the global economic uncertainty.

Despite the bad news, the RBA has reported that competition to lend is increasing- a signal that small businesses can look forward to reduced loan prices and better deals.