Canadian businesses report mounting financial stress

Many Canadian businesses are facing an uphill battle, as evidenced by a 41.4 per cent surge in business insolvencies in 2023 when compared to 2022. The latest data from Equifax Canada’s Market Pulse Quarterly Business Credit Trends Report also points to a 14.3 per cent fourth quarter year over year uptick in the number of businesses that missed a payment on a credit product.

One significant contributor to this mounting stress is the repayment of Canada Emergency Business Account (CEBA) loans. With the deadline for CEBA loan repayments now passed, many businesses find themselves navigating the financial strain of monthly payments accompanied by a higher interest rate — a stark contrast to the initial terms of interest-free and no monthly payments. On January 19, 2024, CEBA loans converted to a three-year term loan with five per cent interest payable per year.

Installment loan delinquencies reported a significant surge, with early-stage delinquencies up by 12.5 per cent and late-stage delinquencies up by 16.3 per cent year-over-year, suggesting that businesses are struggling with monthly loan payments. Revolving credit (cards and line of credit) delinquencies of 30+ days grew by 1.3 per cent year over year, reaching 3.2 per cent in the fourth quarter of 2023. Real estate, rental, leasing, and retail trades also witnessed substantial increases in missed payments.