Equifax data shows rising financial delinquencies as small business resilience weakens nationwide
Canadian businesses are showing signs of diverging financial health, with missed payments on bank-related credit climbing even as supplier payment performance improves.
Equifax Canada’s latest figures, released today (March 10), show financial trade delinquencies increased 9.02% year-over-year in the fourth quarter of 2025, reaching a national rate of 3.52%. At the same time, industrial trade delinquencies (payments owed to suppliers and trade partners) fell sharply by 25.52% to 4.65%.
Meanwhile, the Canadian Small Business Health Index slipped 2.4% compared with a year earlier, suggesting that rising debt levels are beginning to strain business resilience.
The figures show that many firms are maintaining regular supplier payments, but a growing share are struggling to stay current on bank-related credit such as credit cards, loans and lines of credit.
Financial trades measure missed payments tied to bank-issued credit products, while industrial trades track how reliably companies pay suppliers.
“This appears to be more concentrated pressure,” said Jeff Brown, Head of Commercial Solutions at Equifax Canada. “We’re seeing stabilization in day-to-day supplier payments, but leverage built up over the past two years is weighing on service and rate-sensitive sectors. When stress narrows into specific industries and regions, it can tighten lending conditions and increase the risk of localized business setbacks.”
Ontario leads in financial credit stress
Regional data shows Ontario posting the highest financial trade delinquency rate nationwide at 3.88%, representing a 12.90% increase year-over-year.
Within the province, the largest spikes occurred in the Real Estate, Rental and Leasing sector, where delinquency rates surged 24.5%. Finance and Insurance also saw significant deterioration, with delinquencies rising 21.3%.
Prince Edward Island recorded the most rapid growth in financial credit stress, as delinquency rates climbed 32.78% year-over-year.
Quebec was the only province to see improvement, with financial trade delinquencies edging down 1.29% from a year earlier. The province’s stronger labour market—supported by the lowest unemployment rate in the country—helped support business repayment capacity.
Business debt climbs amid borrowing shifts
Average business debt levels also rose significantly, climbing 16.9% year-over-year to $30,035.
Much of the increase was driven by companies less than a year old, where balances surged 64% as new firms relied more heavily on borrowing to establish operations.
Despite higher debt levels, the number of businesses missing payments actually declined. In the fourth quarter of 2025, 282,257 companies reported at least one missed payment, representing an 11.09% drop year-over-year.
Borrowing patterns also shifted. Installment loan balances increased 21.9% year-over-year to $132,101, indicating businesses are turning toward more structured financing. At the same time, revolving credit exposure fell, with credit card balances down 5.0% and lines of credit declining 14.7%.
Manufacturing improves while services feel pressure
Supplier payment performance improved nationwide, with the manufacturing sector leading the gains.
Manufacturing delinquencies fell 32.2% year-over-year, while the sector’s health index rose 0.7% annually and 6.1% quarter-over-quarter.
However, industries that depend more heavily on services and interest-sensitive activity continue to face challenges as borrowing costs remain elevated and consumer demand softens.
The Canadian Small Business Health Index, which tracks resilience and outlook among small and medium-sized enterprises, reflected the growing divide, showing a 2.4% year-over-year decline in business sentiment.
“The data indicates that the business climate is no longer rising or falling together, but rather separating - with some businesses improving their cash flow and leverage, while others are showing that they are more exposed to rate sensitivity and consumer softness. Whether thriving or dealing with challenges, businesses across the country are demonstrating their strength as business owners,” concluded Brown.
