THUNDER BAY — September 16, 2025 | NetNewsLedger Business News — Canadian small businesses are feeling a tougher squeeze, with delinquencies elevated and uncertainty in trade relations weighing on confidence, according to the Equifax Canada Market Pulse — Q2 2025 Quarterly Business Credit Trends Report.
The changes impacting small to medium sized business shipping packages to the United States has just started and are likely to impact business in the next quarter’s report.
Real GDP fell 0.4% in the quarter, a drag on overall sentiment and cash flow.
“Small businesses are navigating a complex environment,” said Jeff Brown, Head of Commercial Solutions at Equifax Canada. “Some sectors tied to international trade and discretionary spending are under stress, while others are holding steady or improving.”
Key Takeaways at a Glance
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286,000+ businesses missed at least one credit payment in Q2 (+5.6% YoY).
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Financial-trade delinquencies (loans/leases/credit lines) rose 13.5% to a 3.48% rate.
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Industrial/B2B trade delinquencies declined 1.7% to 5.55% — firms appear to be prioritizing supplier payments to keep operations moving.
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The Canadian Small Business Health Index fell 1.6% in Q2, pressured by trade tensions and a widening trade deficit, partly offset by lower inflation and rate cuts.
Sector Snapshot: Consumer-Sensitive Industries Hit Hardest
Pullbacks in household spending are rippling through businesses that rely on discretionary dollars:
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Accommodation & Food Services: delinquencies +29.5% YoY
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Retail Trade: +13.3% YoY
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Arts, Entertainment & Recreation: +7.5% YoY
Even as headline inflation eases, essential costs (groceries, rent) continue to absorb consumer budgets—leaving less room for dining out, shopping, or events.
Manufacturing: Mixed Picture
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Overall financial stress up (+1.3% rise in firms with a delinquent trade), but pressure is uneven:
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Heavy Metal Manufacturing: delinquent-business volume +12.1%
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Automotive: remained resilient through H1 2025 (sales firm), though supply-chain risks could pressure results later in the year.
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Provincial & Regional Trends (60+ Days Delinquent, Account Level)
Ontario (high concentration of small firms)
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Missed-payment businesses: +4.3% YoY
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Financial trades: 3.63% rate (+11.79% YoY)
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Industrial trades: 5.51% rate (+5.51% YoY)
Atlantic Canada (more stress in places)
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Prince Edward Island: delinquent businesses +15.6%; industrial-trade delinquency +19.54% YoY
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Nova Scotia: delinquent businesses +8.9%; industrial-trade delinquency +7.85% YoY
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New Brunswick: financial-trade delinquency +11.82% YoY; industrial –7.95% YoY
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Newfoundland & Labrador: financial +4.40% YoY; industrial –8.23% YoY
West & Prairies (some bright spots)
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Alberta: delinquent businesses –2% YoY; industrial-trade delinquency –12.87% YoY (improvement)
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Manitoba: financial-trade delinquency +12.93% YoY; industrial +1.69% YoY
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Saskatchewan: financial +2.88% YoY; industrial +3.78% YoY
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British Columbia: financial +10.64% YoY; industrial –8.27% YoY
Canada overall: Financial trades 3.33% (+8.67% YoY); Industrial trades 5.55% (–1.70% YoY).
Credit Demand and Growth Outlook
The Growth Projection component of the Small Business Health Index fell 2.4% YoY as new originations and credit inquiries cooled. Still, there’s a near-term stir: overall business credit inquiries are down 1% vs Q2 2024 but up 7% vs Q1 2025, led by Agriculture, Arts/Entertainment/Recreation, and Construction—sectors that also saw some of the largest June job losses.
“The true economic impact of today’s trade tensions and rising unemployment won’t be felt all at once,” Brown cautioned. “For many regions and sectors, the effects may only materialiSe as the year’s headwinds continue.”
What It Means for Thunder Bay & Northwestern Ontario
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Hospitality & Retail: Expect tighter consumer wallets. Monitor basket sizes, promo responsiveness, and footfall; move to loyalty-driven retention and targeted offers over blanket discounts.
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Export-linked manufacturers: Build safety stock, diversify suppliers, and revisit FX/commodity hedging given trade-policy volatility.
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Construction & Trades: With inquiries ticking up and costs still elevated, lock in staged draws and cost-plus clauses where possible.
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Agriculture & Resource SMEs: Consider seasonal working-capital lines earlier than usual; secure input financing ahead of winter logistics constraints.
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Cash-flow resilience: If you must prioritise payments, maintain supplier goodwill (industrial trades) while restructuring financial obligations before they slip 60+ days.
Five Practical Steps for Local Owners
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12-week cash forecast with best/base/worst-case scenarios; update weekly.
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Renegotiate terms: ask lenders about interest relief, extended amortization, or interest-only periods; request early-pay discounts from key suppliers.
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Tighten receivables: reduce DSO with deposits, progress billing, and soft collections at 15/30 days.
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Right-size inventory: pivot to A-SKUs, trim slow movers, and deploy just-in-case buffers where supply chains are shaky.
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Protect margins: price reviews quarterly; bundle services; automate repeat tasks (invoicing, reminders) to cut admin time.
Data Snapshot (Q2 2025, Equifax Canada)
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GDP: –0.4%
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Small Business Health Index: –1.6%
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Missed a credit payment: 286K+ businesses (+5.6% YoY)
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Financial-trade delinquency rate: 3.48% (+13.5%)
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Industrial-trade delinquency rate: 5.55% (–1.7%)
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Credit inquiries: –1% YoY, +7% Q/Q
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Sectors with rising inquiries: Agriculture, Arts/Entertainment/Recreation, Construction
