Equifax Canada says that businesses across the country are increasingly relying on credit cards and lines of credit to finance their operations.
Specifically, Equifax said that the credit card balances of Canadian businesses grew by 15% and line of credit usage increased by 11% in this year’s first quarter.
The credit bureau said the increased use of credit indicates growing financial stress in the industrial and financial sectors and poses a threat to the Canadian economy.
At the same time, Equifax noted that total outstanding balances on bank-issued instalment loans among Canadian businesses declined 2.4% from the first quarter of 2022.
Equifax Canada said in a news release that the decline in installment loans and move to credit card usage could hurt businesses’ ability to make investments moving forward.
The first quarter of 2023 also saw a slowdown in new business openings, which Equifax said is bad news for the Canadian economy.
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