Rising small‑business delinquencies could complicate borrowing for owners and property investors
Canada’s small and mid‑sized businesses ended 2025 in a more fragile position, with fresh Equifax Canada figures pointing to a split economy where some firms stayed current on trade bills while others struggled to manage bank debt and higher interest costs.
New data showed financial trade delinquencies rose 9.02% year over year in Q4 2025 to 3.52% nationally. These figures captured missed payments on business loans, credit cards and lines of credit. At the same time, industrial trade delinquencies dropped 25.52% to 4.65%.
Average business debt climbed 16.9% to $30,035, led by a 64% surge among firms less than a year old.
Credit stress narrows by region and sector
“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 recorded the highest financial trade delinquency rate at 3.88%, up 12.90% year over year. Within the province, real estate, rental and leasing delinquencies climbed 24.5%. Delinquencies in finance and insurance also increased, rising 21.3%.
Prince Edward Island posted the fastest acceleration, with financial trade delinquencies jumping 32.78%.
Quebec was the only province to see a year‑over‑year decline, down 1.29%, helped by stronger job growth and the country’s lowest unemployment rate.
At the same time, the Canadian Small Business Health Index fell 2.4% year over year, reversing the rebound seen earlier in 2025 as rate cuts filtered through the economy.
Restructured debt and implications for mortgage brokers
Businesses also appeared to be reshaping how they borrowed. Installment loan balances rose 21.9% to $132,101 on average. Credit card balances fell 5.0% and lines of credit dropped 14.7%.
The number of businesses missing a payment declined 11.09% to 282,257 in Q4, suggesting many owners shifted away from revolving credit and into fixed‑term obligations.
For mortgage brokers, those shifts matter. Tighter business cash flow, heavier term debt and rising delinquencies could all weigh on owners’ ability to qualify for competitive mortgage rates, particularly for self‑employed clients who already faced tougher underwriting and a growing reliance on private and alternative lenders.
Two‑speed recovery tests small‑business borrowers
Industrial trades showed a brighter picture. Manufacturing delinquencies fell 32.2%, and that sector’s health index rose 0.7% year over year and 6.1% quarter over quarter.
Service‑heavy industries, by contrast, continued to struggle with borrowing costs and softer consumer demand.
“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,” Brown said.
Renewal payment shock and the rise of private mortgage solutions for business‑for‑self borrowers suggest those pressures are likely to persist into 2026, particularly as more commercial owners refinance both business and property debt.
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