I like the second letter in Mish's post. The small business person had a good advisor who told him to forget expansion, get rid of debt and "hunker down." I have heard a few stories of people going broke because of expanding in 2007, and I am sure there will be more of these stories as people use the last of their resources to try and keep going.
I have gone on about all these silly businesses that straddled themselves with debt, not even for expansion, but to buy back their stocks at bubbled prices. I suspect some of those companies will be in trouble because of the added debt load.
Talking with a friend who is a small business owner, he said the only reason they are surviving is because they avoided debt and when they did have debt they had a plan to pay it back in a reasonable length of time and stuck to it. He says some competitors are hurting enormously because of their debt loads. He's going to make less money this year, but has no problems maintaining his life style. In the good years the extra income went to household debt reduction.