Business confidence has plunged after the budget and in response to the early stages of the lengthy federal election campaign.
Roy Morgan Research's business confidence index fell 9.1 per cent in May, dragged back to its lowest level since the start of the year.
This was despite a slight improvement on the Australian share market.
"The large drop in business confidence is likely more tied to a poorly received federal budget ... in early May and the uncertainty surrounding the upcoming federal election," the pollster said on Thursday.
However, a separate survey on the specifics of the budget found strong support for the Turnbull government's plan to broaden the definition of small business with firms believing it will encourage them to grow.
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Treasurer Scott Morrison has proposed a cut in the small business tax rate to 27.5 per cent from 28.5 per cent and to widen the definition to those generating a revenue of $10 million from $2 million, meaning more firms will benefit from the change.
It will also allow more businesses to claim the $20,000 instant assets write-off.
The survey by business software provider MYOB found nearly three-quarters of small and medium-sized enterprises backed the proposed change to the small business definition, saying it would allow them to grow.
"It's encouraging to see these barriers to growth removed," MYOB CEO Tim Reed says.
"The previous system discouraged SMEs to grow beyond $2 million in revenue because they lose the benefits of being a small business."
However, an Omnipoll for Sky News found only nine per cent of voters back the company tax rate cut.
