Over 309,000 businesses missed at least one credit payment in the first three months of the year
Rising missed payments and shrinking credit demand in the first quarter of 2025 point to increasing financial strain among Canadian businesses, according to new data from Equifax Canada.
The findings suggest that many firms are choosing to service existing debt rather than take on new obligations, with implications for lenders monitoring commercial credit health.
Equifax’s Q1 2025 Business Credit Trends and Insights Report shows that 11.3% of credit-active businesses — more than 309,000 in total — missed at least one credit payment. This represents a 14.6% increase compared with the same quarter last year. Meanwhile, new credit applications dropped 6% year over year, indicating that businesses may be acting more cautiously despite easing interest rates and relatively stable inflation levels.
The Canadian Small Business Health Index declined 1.5% from the previous quarter to 99.3, reflecting a pullback in credit health and business sentiment following a modest rise in late 2024. The report notes that this decline, while small, could signal emerging difficulties for firms still contending with shifting consumer behaviour and operational costs.
“The early months of 2025 are revealing the pressures the business landscape could be facing,” said Jeff Brown, head of commercial solutions at Equifax Canada. Brown added that small businesses appear to be caught between weaker household consumption and growing financial obligations.
Sectors directly tied to consumer spending are showing the highest increases in delinquencies. Accommodation and Food Services saw missed payments reach 16.9%, while Retail Trade followed at 13.2%. These figures coincide with a $107 decrease in average monthly credit card spending per consumer, adjusted for inflation — now at the lowest level since March 2022.
The report also notes a shift in payment behaviour. Delinquencies for financial trades, including loans and lines of credit, rose from 3.0% to 3.4% — a 15.5% year-over-year increase.
In contrast, industrial trades, which typically include payments to suppliers, rose more moderately from 5.5% to 5.7%. Brown said this pattern may indicate that businesses are opting to preserve supplier relationships, even if it means delaying payments to lenders.
Regionally, Ontario and British Columbia recorded the largest year-over-year increases in financial trade delinquencies, rising 18.8% and 19.9%, respectively. Quebec and Prince Edward Island posted notable increases in industrial trade delinquencies, up 26.6% and 15.9%.
Several industries reported significant year-over-year delinquency increases, including Agriculture (+19.5%), Transportation and Warehousing (+19.3%), Real Estate (+17.0%), Finance and Insurance (+16.4%), and Manufacturing (+10.2%).
The current conditions suggest that many businesses are adjusting financial strategies to manage liquidity, with regional and sector-based differences influencing credit risk profiles.
