Canadian Entrepreneurship Declines, Challenges Build As Companies Fall Behind with Lenders
Equifax Canada data shows a sharp drop in Canadian entrepreneurship and that businesses are cutting back on credit
Equifax Canada Market Pulse — Q1 2026 Quarterly Business Credit Trends Release
TORONTO, June 09, 2026 (GLOBE NEWSWIRE) -- New Equifax Canada data shows in the first quarter of 2026, Canadian entrepreneurship is on the decline and business payment challenges continued to build as more companies fell behind on payments to banks and lenders. In addition, the Q1 2026 Canadian Small Business Health Index did show some positive momentum, rising to 100.9—a 2.3 per cent quarterly increase and a 1.5 per cent gain year-over-year. This rebound is heavily supported by improving future expectations, with small business economic sentiment jumping 6.5 per cent quarter-over-quarter.
Decline in Canadian Entrepreneurship
Commercial data in 2025 and into early 2026 showed a decline in Canadian entrepreneurship. Within a wide variety of sectors, fewer people are looking for loans to start a business and the data shows fewer inquiry volumes across various sectors.
Because a large portion of Canadian businesses are early-stage ventures, this current deceleration is having a notably significant impact. The volume of active young businesses (24 months and younger) decreased significantly by 38.7 per cent. This may indicate that escalating operating costs, persistent inflation, and current macroeconomic conditions may be having an impact on actively degrading the viability of business ownership and hurting new enterprise creation across Canada.
"The current economic environment means that it is more important than ever for lenders to try and get business credit decisions right. While lenders have traditionally relied on the personal credit profile of the business owner to make the credit decision, Equifax data shows that lenders might want to consider a different approach," said Sinéad Gleason, Commercial Solutions Lead at Equifax Canada.
Equifax Business Principal data shows that business principals have 44 per cent more trades, more than double the average balance, and over 30 per cent higher utilization rate than the average Canadian consumer.
"One of our key findings is that traditional credit risk indicators do not always lead to higher delinquency outcomes for the business principal population. Who you are as an individual doesn't always correlate to who you are as a business owner. Business owners may have different credit usage patterns than the average person, but that doesn't mean they are not a good candidate for credit," added Gleason. "Equifax is committed to partnering with small business lenders to support the growth and long-term health of Canadian small businesses".
Delinquencies for Businesses
The national 60+ day delinquency rate for financial trades rose 11.37 per cent year-over-year to 3.83 per cent in Q1 2026. At the same time, the 60+ day delinquency rate for industrial trades fell 26.15 per cent year-over-year to 4.32 per cent. At 90+ days delinquency, financial trade delinquencies climbed to 3.6 per cent, while industrial trade delinquencies fell to 3.1 per cent. Financial trades track missed payments on bank loans, business credit cards, lines of credit and other lender obligations. Industrial trades measure how consistently businesses pay suppliers and trade partners.
Despite the rise in lender-payment stress, the total number of commercial entities in delinquency fell 10.4 per cent year-over-year, suggesting credit pressure is becoming more concentrated rather than spreading evenly across the business market. The data points to a widening split in Canada's business credit market.
"Many businesses seem to be protecting the day-to-day supplier relationships needed to keep operating, while also managing bank debt, longer-term loans, and other lender obligations. This appears to be a continuation of the divide we saw late last year," said Jeff Brown, Head of Commercial Solutions at Equifax Canada. "Businesses are cutting back on credit cards and lines of credit, but late payments to banks and lenders are still rising. That suggests many companies are being very deliberate about where their cash goes, prioritizing supplier payments over other financial obligations."
Businesses cut back on short-term credit
Canadian businesses reduced their use of short-term credit in Q1. Total line of credit balances fell 21.3 per cent year-over-year to $1.55 billion, while business credit card balances declined 17.2 per cent to $5.54 billion. At the same time, average instalment loan debt, which includes longer-term business loans paid back in scheduled payments, increased three per cent year-over-year to $129,421. Credit mix trends suggest businesses may be continuing to move away from revolving credit, such as credit cards and lines of credit, while relying more heavily on structured borrowing.
"Reducing credit card and line-of-credit balances can be a sign of discipline, but it does not automatically mean business conditions are improving," added Brown. "The concern is that some businesses are carrying more longer-term debt. If late payments start to rise on those obligations, it could cause deeper cash-flow strain."
Debt pressure is concentrated among higher-risk businesses
Data also shows debt pressure is not evenly distributed across the business market. The fastest growth in debt loads is coming from newer businesses with credit files open for 13 to 24 months, while more mature businesses with files open for 36 months or longer have seen debt levels flatten or decline slightly.
Businesses in the highest-risk tier saw debt levels increase 35.8 per cent year-over-year. High-risk businesses also continue to carry the largest average debt load, at $108,138 per business, up 32.2 per cent year-over-year and nearly double the debt load of any other risk category.
"Higher-risk businesses are carrying more of the strain," added Gleason. "That matters because it can point to where future credit losses, closures or restructuring pressures may emerge if conditions stay the same."
Longer-term business loans show signs of stress
While businesses are reducing balances on credit cards and lines of credit, late payments on longer-term business loans are rising. The 60+ days delinquency rate for instalment loans reached 3.98 per cent in Q1 2026, overtaking the delinquency rate for business credit cards, which stood at 3.86 per cent.
Instalment loans are often held by more established businesses. Rising late payments in this category may point to deeper cash-flow strain among companies that have been operating for several years, rather than only among newer or more thinly-capitalized firms.
Provincial pressure points — Ontario records highest lender-payment stress
Ontario recorded the highest financial trade delinquency rate in the country, at 4.22 per cent, up 13.93 per cent year-over-year. The province also recorded a 4.31 per cent industrial trade delinquency rate, down 25.56 per cent from a year earlier.
Quebec showed a different kind of pressure. Financial trade delinquencies rose 3.20 per cent year-over-year to 3.60 per cent, while industrial trade delinquencies fell 25.88 per cent to 3.41 per cent. The province also showed stronger commercial credit demand, which may suggest some businesses in Quebec may be using credit to bridge operating pressures rather than fund expansion.
In Western Canada, financial trade delinquencies also increased while supplier-payment stress declined. Alberta's financial trade delinquency rate was 3.72 per cent, up 6.71 per cent year-over-year, while British Columbia reached 3.32 per cent, up 12.94 per cent year-over-year. Alberta and Saskatchewan recorded the highest industrial trade delinquency rates nationally, at 5.34 per cent and 5.33 per cent respectively.
Atlantic Canada also saw sharp increases, including Prince Edward Island, where financial trade delinquencies rose 21.60 per cent year-over-year, and Nova Scotia, where they increased 19.26 per cent.
Province Analysis - 60+ days Delinquency Rates (Account Level)
| Province | Delinquency Rate: Financial Trades (Q1 2026) | Delinquency Rate Change: Financial Trades (Q1 2026 vs. Q1 2025) | Delinquency Rate: Industrial Trades (Q1 2026) | Delinquency Rate Change: Industrial Trades (Q1 2026 vs. Q1 2025) |
| Ontario | 4.22% | 13.93% | 4.31% | -25.56% |
| Quebec | 3.60% | 3.20% | 3.41% | -25.88% |
| Nova Scotia | 2.94% | 19.26% | 4.65% | -27.50% |
| New Brunswick | 2.98% | 5.69% | 3.70% | -23.31% |
| PEI | 2.88% | 21.60% | 2.91% | -36.11% |
| Newfoundland | 3.09% | 14.00% | 3.78% | -25.20% |
| Eastern Region | 2.98% | 13.96% | 4.02% | -26.88% |
| Alberta | 3.72% | 6.71% | 5.34% | -27.78% |
| Manitoba | 3.50% | 12.97% | 3.87% | -16.25% |
| Saskatchewan | 3.10% | 11.02% | 5.33% | -20.88% |
| British Columbia | 3.32% | 12.94% | 5.00% | -26.39% |
| Western Region | 3.49% | 10.07% | 5.03% | -25.36% |
| Canada | 3.83% | 11.37% | 4.32% | -26.15% |
* Based on Equifax data for Q1 2026
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