Canadian Small Business Lending Remains Healthy, Up Year-on-Year

TransUnion Canada introduces inaugural Business Lending Barometer detailing latest business credit trends

  • Barometer looks at small businesses with typically less than 100 employees and includes sole proprietors
  • Overall business credit balances and number of lending accounts continue to grow compared to previous year
  • Significant differences across provinces, both in balance growth and delinquency rates

With small businesses continuing to drive economic growth, the newly released Fall 2019 TransUnion (NYSE: TRU) Business Lending Barometer shows that overall business credit balances in Canada increased year-on-year (YoY) in September 2019, up 6.1% over the previous year. At the same time, lenders also increased the overall number of open credit accounts, up 5.4% for the same 12-month period.

Importantly, delinquency rates, defined as accounts with payments 90 or more days past due (DPD) remained low at 1.95% for September 2019, which represented an improvement of 26 basis points (bps) compared to the same period in 2018.

The TransUnion Business Lending Barometer draws from Transunion’s Business Exchange Database. The database typically includes businesses with up to 99 employees and incorporates data for sole proprietors. It is estimated that this size of business accounts for almost 70% of employment across all industries and over 40% of GDP (based on Statistics Canada Labour Force Survey, and Innovation, Science and Economic Development Canada data). The Barometer looks at the main lending categories available from banks and other credit grantors for this segment of the business landscape and analyzes market dynamics to help understand business behavior over time and across different geographic locations.

“Although the rate of growth in the Canadian economy has slowed in recent quarters, clearly there is still optimism amongst businesses and the lenders that support them. With many businesses still recording growth, particularly in the small business segment, they are willing to take on credit to help manage their day-to-day operations and invest for expansion,” said Matt Fabian, director of financial services research and consulting for TransUnion Canada. “Average balances per business borrower grew over the past year for most categories of credit products. This indicates that businesses have continued demand for credit and that lenders are making additional credit available – a positive formula for growth.”

Business borrowing summary (September 2019)


Average Balance

per Business Borrower

Y-o-Y Change


Delinquency Rate

(% Trades 90+ DPD)

Y-o-Y Change (bps)

Credit Cards





Lines of Credit





Instalment Loans





Demand Loans





Auto Loans





Business Mortgages










The report identified growth in average balance per business borrower across almost all of the main lending product types except credit cards and demand loans, which remained essentially flat. Looking at products at an account level, average business mortgage balances grew 8.5% YoY in September 2019, in contrast to the residential market, which saw growth just below 3%. While the residential mortgage market in Canada has seen significant shifts in its dynamics as a result of the new mortgage qualifying rules implemented in 2018, the business and commercial mortgage industry was not subject to the same rules.

Of businesses that have an instalment loan, the average balance is $130,206 having increased 5.61% YoY. For lines of credit this figure is $42,058, having increased 4.99% YoY in September 2019. Lines of credit are popular with smaller businesses as they are typically amongst the least expensive funding sources available and provide access to operating cash flow at a lower cost.

Average account balances for demand loans, which generally serve as short-term funding for new businesses for a variety of purposes—such as business expansion, equipment purchasing, working capital and bridge loans—fell marginally by 0.4% over the same period.

Delinquencies remain stable

Business delinquency rates, measured as the percentage of all accounts 90+ DPD, declined to 1.95% in September 2019 from 2.20% in September 2018. In contrast, the consumer delinquency rate, measured as the percentage of consumers 90+ DPD on one or more accounts, was 5.54% as of Q3 2019.

Despite the generally stable trend for overall business delinquencies, some categories saw significant YoY improvements. Demand loan delinquencies fell 196 bps to 9.35%. This may be reflective of a combination of steady economic growth and low interest rates that provided more favorable lending conditions for this type of credit product, where borrowers can repay the loan in full or in part at any time, without penalty.

“The current, relatively benign interest rate environment has provided Canadian business owners with an opportunity to invest in their businesses through a mix of credit products, while managing repayments and maintaining healthy delinquency rates. As trade wars continue and economic headwinds increase, it will be interesting to see how this situation evolves and the impact on demand and performance for business credit,” observed Fabian. “Our experience has been that small businesses typically have a lower overall delinquency rate compared to consumer credit as owners use a mix of business and personal credit to fund their businesses. In early 2019, TransUnion presented a research study that looked at payment and delinquency behaviour of business owners between their personal and business credit. That study found that, generally, business owners under financial stress tend to protect their business credit at the expense of their personal credit.”

The TransUnion Small Business Hierarchy Study looked at the credit payment behaviour of small businesses compared to the personal credit payment behaviour of their owners over a three-year period to understand priorities and trade-off decisions made when under financial stress. The study showed that business owners were nearly three times more likely to pay their business accounts first and allow personal accounts to go delinquent. The spread between business and personal account delinquencies narrowed during the later period of the study, but this was against a backdrop of generally stable or improving overall business and consumer credit delinquency rates.

The payment hierarchy research results also showed that, in most cases, credit cards were the first product in a portfolio of lending products to go delinquent, and as such can be seen as a leading indicator of a business’ distress. Importantly, the Business Lending Barometer showed the delinquency rates for business credit cards to be stable.

Regional variations

The Business Lending Barometer showed significant regional variation in both average balance growth and delinquency performance.

Provincial business borrowing summary (September 2019)


Average Balance per Business

YoY Change(%)

Delinquency Rate(% Trades 90+ DPD)

YoY Change (bps)

British Columbia






























New Brunswick





Nova Scotia















British Columbia recorded the largest growth in average balance per business at 16.1% YoY in September 2019. The province also had the highest average balance per business, over 3 times as high as the next highest province, Quebec. This gap is likely largely due to elevated property costs in BC, which drove significantly higher average mortgage loan balances. Nova Scotia and Alberta also experienced strong growth YoY in September 2019 at 9.2% and 9.1%, respectively.

Quebec and Manitoba saw the largest declines in average balance per business at 8.7% and 5.7%, respectively, YoY in September 2019. Saskatchewan’s economy has slowed as the agriculture sector had a mixed start to 2019 resulting in lower spending and a decline in certain sectors like residential construction. Trade tensions with China, and slow growth in consumer spending are weighing on Manitoba.

Applying a tailored approach

“With the economic outlook remaining uncertain, it will be critical for businesses to maintain access to credit to finance their operations and investments. It is important that lenders take the time to understand small business borrower needs at the individual level and avoid uniform underwriting and portfolio management strategies. There are clear regional variations in performance, and by looking at both business credit performance and the credit performance of business owners, banks can apply a more informed view of the overall lending risk involved,” concluded Fabian.

More information about the TransUnion Canada Business Lending Barometer, including details about a variety of credit products, can be found here. Among the details are more information about balance and delinquency trends, including for auto loans, installment loans, lines of credit and mortgage loans. Please visit the following website to register for TransUnion's Fall Business Lending Barometer webinar scheduled for 13 November 2019 at 2 pm ET.

About the TransUnion Business Lending Barometer

TransUnion’s Canada Business Lending Barometer is based on data from Transunion’s Business Exchange Database which includes both account-level and business-level views of key metrics and trends. It looks at different loan product types including credit card, auto, business mortgage, instalment loans and lines of credit. By leveraging the Business Lending Barometer, lending institutions can analyze market dynamics, helping to understand business behavior over time and across different geographic locations throughout Canada. Businesses can access more details about and subscribe to the Business Lending Barometer here.

About TransUnion (NYSE: TRU)

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion reaches consumers and businesses in more than 30 countries around the world on five continents. Based in Burlington, Ontario, TransUnion Canada provides local service and support throughout Canada. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide. We call this Information for Good. Visit to learn more.

For more information or to request an interview, contact:

Aabida Madhani, Ketchum