In the first quarter of 2026, entrepreneurship dropped sharply in Canada, and more companies fell behind on payments to lenders, according to data from Equifax Canada.
The volume of active young businesses (two years and younger) decreased by nearly 39% year over year in the first quarter. There were 122,107 such businesses in Q1 2026 compared with 199,062 in Q1 of 2025, Equifax Canada said via email on Tuesday.
“[E]scalating operating costs, persistent inflation and current macroeconomic conditions may be having an impact on actively degrading the viability of business ownership and hurting new enterprise creation across Canada,” the credit bureau said in a release.
The data follow an April report from the Canadian Federation of Independent Business (CFIB) that said business exits had outpaced business starts since early 2024. The CFIB called on the government to reduce taxes and cut red tape, among other measures.
Businesses fall behind with lenders
The Equifax data also showed that businesses were challenged with payments. For example, the national 60+ day delinquency rate for financial trades, which track missed payments on loans and credit lines, rose more than 11% year over year in the first quarter to 3.83%. At the same time, the 60+ day delinquency rate for industrial trades, which measure how consistently businesses pay suppliers and trade partners, fell more than 26% year over year to 4.32%.
However, despite this rise in lender-payment stress, the total number of companies in delinquency fell more than 10% year over year in the first quarter.
Taken together, these data points suggest a widening split in Canada’s business credit market, Equifax Canada said.
“Many businesses seem to be protecting the day-to-day supplier relationships needed to keep operating, while also managing bank debt, longer-term loans and other lender obligations,” Jeff Brown, head of commercial solutions with Equifax Canada, said in the release. “This appears to be a continuation of the divide we saw late last year.”
Equifax data also suggested that businesses may be continuing to move away from revolving credit, such as credit cards and lines of credit, while relying more heavily on structured borrowing.
“Reducing credit card and line-of-credit balances can be a sign of discipline, but it does not automatically mean business conditions are improving,” Brown said. “The concern is that some businesses are carrying more longer-term debt. If late payments start to rise on those obligations, it could cause deeper cash-flow strain.”
Instalment loans are often held by more established businesses. As such, rising late payments in this category may point to deeper cash-flow strain among companies that have been operating for several years, rather than only among newer or more thinly capitalized firms, the release said.
As things stand, longer-term business loans showed signs of stress in the first quarter: the 60+ days delinquency rate for instalment loans reached 3.98%, overtaking the delinquency rate for business credit cards, which stood at 3.86%.
