Business bankruptcies in Canada - Data and Analysis (1990-2032)

Business bankruptcies are estimated to reach 3,486 in 2026, representing a 6.1% decrease from 2025. This drop reflects a continued post-pandemic normalization, rather than a healthier business environment, as numbers still remain well above pre-pandemic levels. Many small businesses continue to be hurt by trade tensions with the US. According to an October 2025 poll conducted by the Canadian Federation of Independent Business (CFIB), 72.0% of small businesses are experiencing negative financial impacts from ongoing trade tensions with the US. Business bankruptcies rose significantly from 2021 to 2026, increasing at a compound annual growth rate of 12.4%. Bankruptcies continued their decline from 2020 into 2021 because of support from government programs, including the Canada Emergency Wage Subsidy and the Canada Emergency Business Account (CEBA). Banks also offered payment deferrals, the Canada Revenue Agency relaxed collections and interest rates remained low. These measures allowed businesses to keep paying employees and stay afloat. Conditions changed from 2022 onward as support programs ended and businesses had to begin repaying this debt. The Bank of Canada raised interest rates from 0.25% in March 2022 to 5.0% in July 2023 to combat inflation; however, this also accelerated the pace at which businesses were unable to repay their loans. As a result, business bankruptcies jumped 35.0% and 41.2% in 2022 and 2023, respectively. The CEBA repayment deadline in January 2024 further accelerated bankruptcy proceedings. CEBA loans were interest-free, and businesses that repaid them by the deadline had part of their balance forgiven, while those that missed it saw their loans converted into three-year term loans at 5.0% interest. Many recipients missed the deadline, resulting in a 28.9% increase in business bankruptcies. In 2025, business bankruptcies declined as the Bank of Canada continued to lower interest rates, easing debt-servicing costs. Still, much of the decrease represented a drop from a high base following the spikes in 2023 and 2024. 2025 bankruptcies were still markedly above pre-pandemic levels, though the decline reflected some normalization.