Active firms under 24 months fell 38.7% as enterprise creation cooled
Nearly four in ten of Canada's youngest businesses have vanished from Equifax Canada's active rolls, a sign of how sharply enterprise creation has cooled heading into 2026.
The number of active businesses aged 24 months and younger fell 38.7 percent, according to Equifax Canada, which said early-stage firms make up a large share of the market and amplify the slowdown.
Fewer people sought loans to start a business through 2025 and into early 2026, and inquiry volumes dropped across a range of sectors.
Equifax Canada pointed to rising operating costs, persistent inflation, and current macroeconomic conditions as factors degrading the viability of business ownership.
A widening split is now running through the business credit market.
The total number of commercial entities in delinquency fell 10.4 percent year-over-year, yet the national 60+ day delinquency rate for financial trades, which tracks bank loans, business credit cards, lines of credit and other lender obligations, rose 11.37 percent year-over-year to 3.83 percent.
Industrial trades, which measure payments to suppliers and trade partners, told the opposite story, with the 60+ day rate falling 26.15 percent to 4.32 percent.
Many businesses are protecting the supplier relationships they need to keep operating while still managing bank debt and other lender obligations, said Jeff Brown, head of commercial solutions at Equifax Canada.
They are cutting back on credit cards and lines of credit, yet late payments to banks and lenders keep rising.
That points to companies "prioritizing supplier payments over other financial obligations," he said.
Equifax Canada said the strain is concentrating among the riskiest borrowers.
Businesses in the highest-risk tier saw debt levels climb 35.8 percent year-over-year and now carry the largest average load at $108,138 per business, up 32.2 percent and nearly double any other risk category.
The fastest debt growth came from newer firms with credit files open 13 to 24 months, while files open 36 months or longer flattened or slipped.
Higher-risk businesses are "carrying more of the strain," said Sinéad Gleason, commercial solutions lead at Equifax Canada.
She said the pattern flags where credit losses, closures or restructuring pressures may build if conditions hold.
Borrowing patterns are shifting alongside the stress.
Canadian businesses cut short-term credit in Q1, with total line of credit balances down 21.3 percent year-over-year to $1.55bn and business credit card balances down 17.2 percent to $5.54bn.
Average instalment loan debt, covering longer-term loans repaid on schedule, rose three percent to $129,421.
Late payments are following the money into those longer-term obligations: the 60+ day delinquency rate for instalment loans reached 3.98 percent, overtaking the 3.86 percent rate for business credit cards.
Lower credit card and line-of-credit balances "can be a sign of discipline," Brown added, but not proof that conditions are improving.
The bigger risk, he said, is longer-term debt, where rising late payments could deepen cash-flow strain.
Equifax Canada also urged lenders to look past personal credit profiles when assessing business borrowers.
Its Equifax Business Principal data shows principals hold 44 percent more trades, carry more than double the average balance and run a utilization rate over 30 percent higher than the average consumer.
"Who you are as an individual doesn't always correlate to who you are as a business owner," Gleason said.
Owners may use credit differently from the average person, she said, without being weaker candidates for it.
Among provinces, Ontario recorded the highest financial trade delinquency rate at 4.22 percent, up 13.93 percent year-over-year.
