More than 10 percent of Canadian businesses have missed a credit payment this year, and delinquency rates could continue to climb, according to a credit bureau report.
The problem is being felt more acutely in different industries, such as accommodation and food services, which saw missed payments increase to 16.9 percent, and in retail trade, which saw the rate reach 13.2 percent.
“Both sectors are likely suffering from weak consumer spending, rising operating costs, and growing household debt levels,” the report said. Equifax noted that the average monthly consumer credit card spending per cardholder fell $107 during the first quarter of 2025 to the lowest level since March 2022.
“This seems to be a classic ripple effect,” said Jeff Brown, head of commercial solutions at Equifax Canada. “Equifax data suggests when households pull back, restaurants, retailers and local service providers feel it first — and hardest. This can then travel up the supply chain, where everyone from manufacturers to transport companies feel its effects.”
The report also found that fewer businesses are applying for credit this year, compared to previous years.
Equifax’s Canadian Small Business Health Index for businesses across Canada dropped to 99.3 in Q1 2025, which is a 1.5 per cent decline from the previous quarter, the release said.
The index remains slightly above its 2024 level, but the drop “signals a loss of momentum” after gains were made last year, Equifax said.
“The Canadian Small Business Health Index shows that business sentiment is down three per cent in Q1 2025 compared to the previous quarter,” said Brown.
He said the results show that businesses could feel pressure over slowing household consumption and debt stress.
Six percent fewer businesses applied for credit during the first three months of this year, according to the release.
Equifax said this could be a sign that small businesses are becoming more cautious, opting to manage current debt rather than take more on.
When it came to making payments, Equifax said, businesses often put paying suppliers before paying down debt.
The 60-plus day delinquency rate for business lenders increased to 3.4 percent from 3.0 percent, Equifax said. It increased 15.5 percent since the same time last year.
Business debt to suppliers increased slightly from 5.5 percent to 5.7 percent, according to the release.
“Businesses are paying suppliers, but with little to spare, they may be missing banking obligation payments,” Brown said. “This may signal that businesses are strategically recalibrating, with many businesses prioritizing supplier relationships to keep operations moving.”
Provincial Breakdown
The report also measures the health index across different regions of Canada, noting that some businesses are managing better than others.In Atlantic Canada, the health index started with a 2.6 percent quarter-over-quarter increase, according to the report.
“The region is experiencing a boost from numerous major investment projects, particularly in renewable energy, which enhances its economic vitality.”
In Quebec, the business health index saw a 2.8 percent increase over the last quarter of 2024.
However, Equifax said that there were some signs of risks ahead for the province: “Delinquencies are increasing for all trade types, and overdue loan balances have risen sharply over the past year.”
Ontario saw a 2.3 percent drop in the business health index, largely driven by weak credit performance, lower growth expectations for businesses, and a “decline in overall sentiment.”
The province is also vulnerable to fluctuations in the automobile market, according to Equifax.
Lenders in that province saw more delinquencies on financial and non-financial trades, the report said, noting that credit usage and 30-day or more delinquencies increased.
“Specifically, 30–60 day financial trade delinquencies rose by 5 per cent quarter-over-quarter, while delinquencies of 90 days or more increased by 5 per cent,” Equifax said.
The prairie provinces of Manitoba and Saskatchewan saw a 2.7 percent drop in the index over the previous quarter.
Equifax’s report noted that 30–60 day delinquencies and overdue loan amounts have “increased sharply” in the last six months.
Debt repayment and cash flow outlook has also weakened in the region.
Alberta businesses’ health index is strong, Equifax said, with a 1.3 percent year over year growth.
However, the report said there also some signs of caution in the provinces’ business sector.
“Businesses were less optimistic about the economy than last year, with a notable decline in the first quarter of 2025,” the report said.
B.C. saw a 5 percent decline in its business health index, with the report saying that the provincial economy slowed for most of 2024.
“This was primarily due to high interest rates and elevated debt burdens, constraining businesses and their outlook,” the report said.
