The government, which tipped blocking the social media giant earlier this month, is due to make a decision on Friday, although previous deadlines have been pushed out.
The measure is one of several recommended by a working group established in response to abuse on Facebook leveled at the King by anonymous users, as Tongans debate contentious legislative plans that would weaken his powers.
The Attorney General, Linda Folaumoetu'i, had said Facebook pages were being investigated by the police and the people behind them could face criminal charges, including treason. In an interview on Wednesday, she said cabinet was expected to meet on Friday and make a decision on whether to block Facebook.
Businesses are nervously awaiting the outcome.
"It's an overreaction on the government's part," said Paul Taumoepeau, the president of Tonga's Chamber of Commerce, adding that several businesses had told him they were worried about the potential loss in sales without Facebook.
Social media has become a key source of low-cost advertising and consumer engagement for businesses in Tonga, where more than half of the population uses Facebook. Losing access to this market would "definitely have an impact", according to Maliu Mafi, who manages the Emerald Hotel and Restaurant.
"A lot of our bookings come through our Facebook page, either for the restaurant or for the hotel," he said.
The proposed ban comes amid what businesses describe as a worsening enviroment for foreign investment after the introduction of the contentious Foreign Exchange Control Act earlier this year. Lawyers and businesses say despite lax enforcement, the law has had a chilling effect on foreign investment.
The shuttering of the Scenic Hotel in March was in part because the act had made it hard to get money out of Tonga, its managing director Brendan Taylor told the AFP news agency in July.
"The issue you have got in Tonga is that no overseas companies are keen to go in," he said.
Mr Taumoepeau said a Facebook ban would only compound these issues for foreign businesses.
"It's not just business impact, which is very negative, but also the social impact. Facebook, especially in more democratic countries, it's pretty much a human right."
A manager at whale watching operator Deep Blue Diving, Tukia Tatafu, said the government should just "ignore" negative comments online rather than try to block them.
"When people share me things like that I just kindly tell them that it's not the sort of stuff I'm interested in."