Canadian Business Debt Jumps 7.3% as Tariffs Bite and Serious Delinquencies Hit Highest Level Since 2019

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Canadian businesses are carrying noticeably heavier debt loads just as trade tensions, higher operating costs and uneven demand make cash flow harder to manage. New Equifax Canada data released September 14 shows average commercial debt per business climbed 7.3% from a year earlier to $30,581 in the second quarter of 2026. More troubling, the rate of financial credit accounts at least 60 days behind reached 4.0% — its highest level since 2019.

The numbers do not mean tariffs caused the entire increase in borrowing. They do show businesses entering the latest escalation in Canada-U.S. trade tensions with less financial room for error. Beneath the national averages, the stress is particularly visible among higher-risk borrowers, young companies and manufacturers, even as other indicators suggest many firms are still fighting to keep their operations running normally.

The Average Business Is Carrying 7.3% More Debt

Equifax’s second-quarter data puts average commercial debt at $30,581 per business, up 7.3% compared with the same period in 2025. That is an important distinction from saying Canada’s total corporate debt rose by the same amount: the Equifax measure tracks the average balances carried by businesses in its commercial credit data. Still, the increase points to a larger financial burden being carried by firms already navigating an unusually complicated economy.

Borrowing by itself is not necessarily bad news. A company may take on debt to purchase equipment, open another location or finance inventory ahead of stronger sales. The concern is what happens when balances rise at the same time that customers slow purchases, suppliers increase prices or export markets become less predictable. For a small manufacturer or distributor, even a healthy loan can become difficult to service if expected cash receipts arrive later than planned.

Serious Delinquencies Are Moving in the Wrong Direction

The strongest warning in the Equifax numbers is not simply that businesses owe more. The 60-plus-day delinquency rate on financial credit products rose to 4.0%, an increase of 19.7% from a year earlier and the highest level recorded since 2019. Commercial credit cards are showing similar deterioration: their 60-plus-day delinquency rate rose 24% year over year to 4.07%.

Yet the picture is not uniformly negative. Equifax found that the number of businesses with at least one account 30 or more days overdue actually declined 3.6% to 271,645. In other words, fewer businesses may be slipping into delinquency, but some of those already struggling appear to be falling further behind. That distinction matters because a payment that is a few weeks late can reflect timing problems, while accounts more than two months overdue can indicate a deeper and harder-to-correct cash-flow squeeze.

Businesses Appear to Be Protecting Suppliers First

One of the most revealing parts of the data is the divergence between payments to lenders and payments to suppliers. While serious delinquencies on financial products increased, the 60-plus-day delinquency rate for industrial trade credit fell 24.4% from a year earlier to 4.26%. Equifax found supplier delinquencies falling across every Canadian region, including declines exceeding 20% in Ontario, Quebec, Alberta, Saskatchewan and British Columbia.

That pattern offers a glimpse into the decisions taking place behind the counter at financially stretched businesses. A restaurant needs food deliveries, a contractor needs materials and a manufacturer needs components if it wants to continue generating revenue. Missing those payments can interrupt operations almost immediately. A lender payment, although equally real as a financial obligation, may seem easier to delay when cash is scarce. Equifax cautions that better supplier-payment performance therefore should not automatically be interpreted as evidence that overall business conditions are improving.

Higher-Risk Companies Are Taking On Much More Debt

The national average also hides striking differences between borrowers. Businesses classified by Equifax as high risk carried an average debt load of $125,517 in the second quarter, a 48.2% increase from a year earlier. Businesses in the company’s highest-risk category saw average balances more than double, rising 103.1% to $42,986. Those increases are substantially larger than the 7.3% increase recorded across businesses overall.

Risk classifications do not guarantee that an individual company will fail, and high borrowing does not automatically mean distress. The combination becomes more concerning when businesses with weaker credit profiles simultaneously increase balances and struggle to stay current. It is the commercial equivalent of losing a financial cushion: one delayed customer payment, equipment breakdown or unexpected cost increase can become significantly harder to absorb. For lenders, the growing concentration of debt among riskier borrowers may therefore matter as much as the headline national average.

Canada’s Youngest Businesses Are Loading Up on Credit

Companies that had been operating for 12 months or less showed some of the fastest debt growth in the entire Equifax dataset. Average balances among those young firms increased 71.7% year over year, reaching $48,173. The increase is notable because businesses in their first year often face unusually heavy upfront expenses before sales and cash reserves have had time to mature.

A new business may need equipment, deposits, inventory, insurance, renovations and payroll before it develops a stable base of repeat customers. Credit can bridge that gap and, in successful cases, finance growth rather than distress. Equifax itself warns against treating rising debt as proof that young companies are in trouble. The vulnerability emerges when rapidly expanding balances are combined with difficulty meeting financial obligations. In an uncertain trade environment, that leaves newer firms especially sensitive to sudden input-price changes, weaker customer demand or an unexpected disruption to their supply chains.

The Type of Debt Businesses Carry Is Changing

Businesses are not simply adding more of every kind of credit. Average line-of-credit balances fell 14.6% year over year to $17,570, while average commercial credit-card balances declined 8.9% to $5,412. Installment loans moved in the opposite direction, rising 6.9% to an average of $131,107. Equifax said the shift may indicate that some businesses are turning toward other forms of borrowing or debt consolidation.

Earlier federal small-business financing research shows why that distinction matters. Innovation, Science and Economic Development Canada found that in 2024, working or operating capital accounted for 49% of intended uses among small businesses seeking debt financing. Another 17% planned to use borrowed funds for debt consolidation, the highest proportion recorded in that dataset over a decade. Those figures predate the current Equifax release and should not be treated as an explanation for today’s balances, but they illustrate how commercial debt increasingly can be about maintaining liquidity as well as financing expansion.

Ontario Leads in Financial Delinquency, While B.C. Leads in Debt

Financial pressure looks different depending on where a business operates. Ontario posted Canada’s highest 60-plus-day financial-trade delinquency rate in the second quarter at 4.44%. Alberta followed at 3.93%, with Manitoba at 3.68%. Quebec’s rate was 3.57%. At the same time, industrial supplier-credit delinquency rates declined in every region, reinforcing the national pattern of businesses doing a comparatively better job of keeping critical suppliers current.

British Columbia stood out for a different reason. Its businesses carried the country’s highest average commercial debt load, at $79,171, even as commercial credit inquiries in the province fell 4% from a year earlier. Atlantic Canada, meanwhile, recorded the fastest percentage increase in average business debt at 21.2%. The differences make a single national narrative difficult. A business owner in Vancouver, Toronto or Halifax may be confronting the same broad trade uncertainty while facing very different borrowing patterns and regional economic conditions.

Manufacturers Are Feeling the Trade Pressure

Manufacturing is one of the clearest places where commercial-credit stress intersects with Canada’s trade fight. Equifax reported that manufacturing credit inquiries fell 3.5% year over year in the second quarter, while 60-plus-day bank-loan delinquencies in the sector rose 21.9% to 4.5%. That combination suggests a sector becoming more cautious about new borrowing even as payment problems among existing borrowers worsen.

Tariffs are only one factor, and the timing matters. Equifax’s debt figures cover the second quarter, so Canada’s newest retaliatory measures, which took effect September 8, cannot have caused those Q2 balances. However, trade pressure is clearly part of the environment businesses now face. Statistics Canada recently found that 32.2% of businesses expect U.S. tariffs on Canadian imports to hurt them over the next year. Ottawa has also imposed new 15%, 25% and 50% counter-tariffs covering $27.6 billion of U.S. imports, extending the uncertainty surrounding costs and supply chains.

More Troubled Businesses Are Trying to Restructure Instead of Closing

Federal insolvency figures add another layer to the credit data. Canada recorded 1,281 business insolvencies under the Bankruptcy and Insolvency Act during the second quarter, virtually unchanged from the 1,278 recorded one year earlier. The composition shifted noticeably, however. Business bankruptcies fell 8.1%, while proposals — formal attempts to reach new arrangements with creditors — increased 30.3%.

That suggests more distressed businesses are attempting to reorganize their debts instead of immediately shutting down. Sector differences are significant. Transportation and warehousing recorded 136 insolvencies in Q2, up 36% from a year earlier, while construction recorded 214, the largest number among major industries and roughly 2% more than a year earlier. The broader trend remains mixed rather than catastrophic: government data for the 12 months ending July showed business insolvencies down 8.4% from the preceding 12-month period. Financial strain is rising in specific pockets without yet translating into a nationwide wave of business failures.

The Bigger Risk Is a Long Cash-Flow Squeeze

The credit numbers arrive while Canadian companies are still reporting substantial cost pressure. Statistics Canada’s third-quarter business-conditions data found 59.8% of businesses expected at least one cost-related obstacle over the next three months. Inflation was cited by 41.6%, while 24.1% expected input costs to be an obstacle. More than a quarter of businesses said they had already passed tariff-related cost increases to customers during the previous 12 months.

The Bank of Canada has found a similarly complicated environment. Business sentiment deteriorated in its second-quarter survey, and trade uncertainty continued weighing indirectly on domestic sales. About one-fifth of firms reported cost pressure related to tariffs and trade policies. Yet investment intentions remained relatively strong, meaning Canadian business is not simply retreating. That may be the most important takeaway from Equifax’s report: businesses are still borrowing, investing and paying essential suppliers, but a growing group is doing so with thinner financial margins and less tolerance for another economic shock.

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