OTTAWA – A recent Equifax® Canada’s Q1 2025 Business Credit Trends and Insights Report sited there were an increase in delinquencies and a decrease in credit applications across the country. The report revealed that many Canadian businesses appear to be approaching 2025 with increasing concern with the highest delinquencies since 2009.
The number of businesses seeking credit fell by six per cent compared to the same period last year, suggesting caution on the part of small business and a focus on existing obligations instead of taking on new debt.
“The Canadian Small Business Health Index shows that business sentiment is down three per cent in Q1 2025 compared to the previous quarter,” noted Jeff Brown, Head of Commercial Solutions at Equifax Canada. “The early months of 2025 are revealing the pressures the business landscape could be facing. Many businesses are caught in a squeeze from both slowing household consumption on one hand and growing business debt stress on the other.”
More than 309,000 businesses—representing 11.3 per cent of all credit-active firms—missed at least one payment in the first quarter of 2025. This marks a 14.6 per cent year-over-year increase in delinquencies, underscoring widespread financial pressures.
The Accommodation & Food Services and Retail Trade sectors showed the greatest amount of missed payment which climbed to 16.9 per cent, while Retail Trade reached 13.2 per cent. These industries are particularly exposed to reduced consumer spending, higher operating costs, and elevated household debt levels. In Q1 2025, average monthly credit card spending per consumer fell by $107—the lowest level since March 2022.
Shifting Payment Priorities
Data suggests businesses are changing how they manage tight cash flow. Delinquency rates on financial trade accounts (such as loans and credit lines) over 60 days past due rose from 3.0 per cent to 3.4 per cent—a 15.5 per cent increase year-over-year. However, delinquencies on industrial trade accounts—typically involving payments to suppliers—increased more modestly from 5.5 per cent to 5.7 per cent.
“Businesses are paying suppliers, but with little to spare, they may be missing banking obligation payments. This may signal that businesses are strategically recalibrating, with many businesses prioritizing supplier relationships to keep operations moving,” added Brown.
Ontario and British Columbia saw the largest year-over-year jumps in financial trade arrears, rising 18.85 per cent and 19.93 per cent, respectively.
Key Sectors Showing Signs of Distress
Several industries recorded double-digit year-over-year increases in missed payments:
- Agriculture: +19.5%
- Transportation & Warehousing: +19.3%
- Real Estate: +17.0%
- Finance & Insurance: +16.4%
- Manufacturing: +10.2%
“Businesses across the country and across a variety of industries are showing increased vulnerabilities as broader economic uncertainty continues,” said Brown. “Businesses will continue to need resilience and careful planning to navigate this economic environment.”
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