“A lot of these companies that needed to borrow to repay their CEBA loans are going through excessive rates of interest and might be challenged to satisfy their cost obligations,” stated Dan Kelly, CFIB president.
Equifax Canada’s head of economic options, Jeff Brown, agrees that the state of affairs exacerbates the debt burden for companies, with the info exhibiting extra are struggling to maintain up repayments on their borrowing.
“Whereas it might really feel like CEBA is transferring into the rear-view mirror, it’s actually a matter of companies turning to new installment loans to safe their monetary stability,” he stated Jeff Brown. “Many companies had been centered on the forgiveness deadline and paying again debt to benefit from this timeline. The elevated reliance on these loans has additionally contributed to a notable rise in delinquencies, notably in installment loans.”
Excellent balances owed by companies to monetary establishments hit a brand new excessive of $31.9 billion in Q1 2024 — a 7.4% improve from final yr.
“The latest price lower by the Financial institution of Canada provides hope that we might be on a development in direction of decrease charges if inflation stays in examine,” stated Brown. “Companies might get some respiration room on debt funds, which may probably liberate sources for progress.”
