Canadian Businesses Face Rising Debt and Payment Stress

Canadian businesses are grappling with rising debt levels and increased payment stress, according to new data from Equifax Canada. The average debt per business increased by 7.3% year-over-year to $30,581 in the second quarter of 2026. This trend is particularly pronounced among higher-risk businesses, where the average debt load surged by 48.2% to $125,517 per business.

The data also highlights a significant divide in how businesses are managing their financial obligations. While businesses are generally staying current with suppliers, there is growing pressure from banks and lenders. The 60+ day delinquency rate on financial credit products reached its highest level since 2019, at 4.0%, up 19.7% year-over-year. This suggests that many businesses are making difficult choices about where their cash goes, prioritizing essential payments over others.

Trade tariffs are adding to the economic uncertainty. Recent changes have affected key industries, leading to a 30.32% year-over-year increase in business restructuring proposals. Despite this, late payments to suppliers have decreased, with the 60+ day delinquency rate for industrial trade credit falling 24.4% to 4.26%. This trend is encouraging, but it does not necessarily indicate a broader improvement in business conditions.

The increase in debt is not evenly distributed. Younger businesses, often with higher start-up costs, are experiencing a 71.7% year-over-year increase in average debt balances, reaching $48,173. High-risk businesses, defined by their Equifax Business Failure Risk Score, are carrying the largest average debt load, with a 48.2% increase year-over-year to $125,517. These businesses are also seeing their average balances more than double, increasing by 103.1% to $42,986.

Businesses are also shifting away from revolving credit. Average line-of-credit balances declined by 14.6% year-over-year to $17,570, while average commercial credit card balances fell by 8.9% to $5,412. In contrast, average installment loan balances increased by 6.9% to $131,107, suggesting that businesses are seeking other debt consolidation solutions.

The number of businesses with at least one 30+ day delinquency fell by 3.6% year-over-year to 271,645. However, the severity of late payments on financial products continued to increase. The 60+ day delinquency rate on commercial credit cards rose by 24% year-over-year to 4.07%.

Equifax Canada's data also reveals a widening divide in credit performance among provinces. Ontario recorded the highest provincial financial-trade delinquency rate at 4.44%, followed by Alberta at 3.93% and Manitoba at 3.68%. In contrast, industrial trade delinquencies declined across every region, with decreases of more than 20% in Ontario, Quebec, Alberta, Saskatchewan, and British Columbia.

British Columbia entered the second half of 2026 with the highest average commercial debt per business in Canada, at $79,171. Commercial credit inquiries in the province declined by 4% year-over-year. Atlantic Canada recorded the fastest increase in average business debt, up 21.2% year-over-year.

The data suggests that many Canadian companies are being cautious about borrowing while managing higher debt and rising payment pressure.

The shift towards restructuring proposals is also noteworthy. According to separate federal insolvency statistics, there were 1,281 business insolvency filings during the second quarter of 2026, essentially unchanged from a year earlier. However, bankruptcies declined by 8.1% while restructuring proposals increased by 30.3% year-over-year. This suggests that a growing proportion of insolvent businesses are attempting to restructure their obligations rather than moving directly to bankruptcy.

The ongoing uncertainty around economic growth, interest rates, operating costs, and the evolving Canada-U.S. trade environment is exacerbating these challenges.

Equifax Canada remains committed to supporting lenders and businesses through this period of economic and trade uncertainty.