Data from Equifax’s Canada Q3 Business Credit Trends Report may be of interest to dealers, especially those just starting out, as findings show newer Canadian businesses are driving significant growth in debt balances.
The company said it sets a complex stage for the upcoming holiday season, as total business debt balances rose to $35 billion in the third quarter of 2024 — up 15.3 per cent from the same period last year. And businesses that opened over the past two years added to a 25.2 per cent rise in balances, compared to their counterparts in Q3 2023.
“Newer businesses are driving debt growth as they navigate the high costs of establishment and operation,” said Jeff Brown, Head of Commercial Solutions at Equifax Canada, in a statement. “While these businesses are contributing to the economy’s overall momentum, rising delinquencies among debt-burdened enterprises remind us that financial recovery is not evenly distributed.”
Dealers with years in the game may also be interested to note that established businesses showed financial caution; Equifax Canada said the average debt per business dropped 8.1 per cent year-over-year to $25,366 in Q3 2024. “This demonstrates differing approaches among businesses, with newer enterprises contending with higher operational costs while more established ones prioritizing managing debt conservatively,” said Equifax Canada in its update.
However, the company also made clear that economic conditions are showing early signs of stabilization, thanks in part to recent interest rate cuts and inflation returning to the Bank of Canada’s 2 per cent target. They said its Equifax Canadian Small Business Health Index was up 1.5 per cent in Q3 2024, showing stronger business confidence and improving credit access.
Looking ahead, Equifax Canada said the holiday season presents opportunities and challenges for Canadian businesses. “While improving sentiment and easing financial pressures offer hope, rising delinquencies and an uneven recovery are a reminder of the resilience required for Canadian businesses to succeed in this environment,” said Brown.
