Canadian businesses are carrying more debt and showing increasing signs of payment stress with banks and lenders, according to new Equifax Canada data for the second quarter of 2026.
Average commercial debt per business rose 7.3 per cent year-over-year to $30,581, while the 60-plus-day delinquency rate on financial credit products reached 4.0 per cent, its highest level since 2019 and a 19.7 per cent increase from a year earlier.
“The data continues to show an important divide in how Canadian businesses are managing their financial obligations,” said Jeff Brown, head of commercial solutions at Equifax Canada. “Businesses appear to be doing a better job of staying current with suppliers they depend on to keep operating, all the while payment pressure with banks and lenders continues to build. This suggests many businesses are still making difficult choices about where their cash goes.”
Trade tariffs add uncertainty
Equifax said recent changes to trade tariffs are affecting selected Canadian exports and adding pressure to businesses and sectors already managing elevated debt and cash-flow challenges.
Business restructuring proposals surged 30.32 per cent year-over-year, while late payments to suppliers continued to decline. The 60-plus-day delinquency rate for industrial trade credit fell 24.4 per cent year-over-year to 4.26 per cent.
“This is a period of significant economic and market uncertainty. Equifax Canada is committed to helping lenders make smart lending decisions so that businesses will have the access to capital they need to keep our economy strong,” noted Brown.
Debt growth concentrated among higher-risk businesses
The increase in commercial debt was most pronounced among higher-risk businesses, Equifax said. Businesses classified as high risk, with an Equifax Business Failure Risk Score between 1026 and 1060, carried average debt of $125,517 per business, an increase of 48.2 per cent from a year earlier.
Businesses in the highest-risk tier saw average balances more than double, rising 103.1 per cent to $42,986. Debt also increased sharply among the youngest businesses, with companies 12 months old or younger recording a 71.7 per cent year-over-year increase in average debt balances to $48,173.
“These are the businesses we need to watch closely,” said Brown. “Rising debt is not necessarily a sign of financial distress on its own, particularly for a young or growing business. The concern is when rapidly increasing balances are combined with greater difficulty staying current on financial obligations.”
Businesses continued to move away from revolving credit during the quarter. Average lines of credit balances declined 14.6 per cent year-over-year to $17,570, while average commercial credit-card balances fell 8.9 per cent to $5,412. Average installment-loan balances, meanwhile, increased 6.9 per cent to $131,107, which Equifax said may suggest businesses are seeking other debt-consolidation solutions.
The number of businesses with at least one delinquency of 30 days or more fell 3.6 per cent year-over-year to 271,645. However, the severity of late payments on financial products continued to rise, with the 60-plus-day delinquency rate on commercial credit cards increasing 24 per cent to 4.07 per cent.
Provincial credit performance diverges
Ontario had the highest provincial financial-trade delinquency rate at 4.44 per cent, followed by Alberta at 3.93 per cent and Manitoba at 3.68 per cent.
Supplier payment trends moved in the opposite direction, with industrial trade delinquencies declining across every region. Ontario, Quebec, Alberta, Saskatchewan and British Columbia each recorded declines of more than 20 per cent.
British Columbia entered the second half of 2026 with the highest average commercial debt per business in Canada, at $79,171, while commercial credit inquiries in the province declined four per cent year-over-year. Atlantic Canada recorded the fastest increase in average business debt, at 21.2 per cent.
“Lower supplier delinquencies are encouraging, but they should not necessarily be interpreted as evidence that business conditions are broadly improving,” added Brown. “When businesses are staying current with suppliers while falling further behind with lenders, it can be an indication that they are prioritizing the payments most essential to keeping the business operating.”
Credit demand and restructuring
Commercial credit inquiries increased 2.6 per cent overall in the second quarter to 259,720, although manufacturing inquiries declined 3.5 per cent year-over-year. The manufacturing sector also recorded a 21.9 per cent increase in 60-plus-day bank-loan delinquencies, which reached 4.5 per cent.
Separate federal insolvency statistics showed 1,281 business insolvency filings during the quarter, essentially unchanged from a year earlier. Bankruptcies declined 8.1 per cent, while restructuring proposals increased 30.3 per cent year-over-year.
“The shift suggests that a growing proportion of insolvent businesses are attempting to restructure their obligations rather than move directly to bankruptcy,” noted Brown.
Transportation and Warehousing recorded a 36 per cent year-over-year increase in insolvencies. Construction had the largest number of insolvency filings nationally, at 214, representing a two per cent increase from a year earlier.
Businesses remain cautious
Equifax said the second-quarter results come as Canadian businesses contend with uncertainty around economic growth, interest rates, operating costs and the evolving Canada-U.S. trade environment.
“For businesses, that makes managing cash flow and understanding their credit position increasingly important,” concluded Brown. “The data suggests many Canadian companies are being cautious about borrowing while managing higher debt and rising payment pressure.”
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