Politicians, business owners and those who support economic development gathered in Yellowknife last week to celebrate the 10th anniversary of the NWT Business and Development and Investment Corp. (BDIC), a key player in building up businesses within the territory.
Over the last decade, BDIC has provided over $70 million in loans to more than 400 NWT companies, all the while creating and maintaining over 630 subsidiary and investment positions.
Formed after the amalgamation of the NWT Business Credit Corp. and NWT Business Development in 2005, BDIC has been able to simultaneously build up surpluses and diminish baggage left over from its predecessors.
“We have brought loan loss provisions down by over 25 per cent to a little less than 15 per cent,” said Pawan Chugh, CEO for the company since its inception.
“We are hoping that the due diligence continues and we keep serving in the same way and, at some point in the near future, we might do single digits.”
BDIC has managed to achieve the second lowest loan loss provisions in the country out of any provincial loan company, behind only Investment Quebec.
“With our loan contribution program, we had less than five applicants in 2005-2006 when we took over BDIC and we had close to 50 applicants in the last year,” Chugh said. “This past year we’ve given close to $300,000 in contributions, up from about $25,000 in 2005-2006.”
The organization has shown its grit over the years, helping numerous companies around the NWT to stay afloat during tough economic times.
“We gave breaks to about 75 companies after the 2008 recession and we gave them about $850,000 in reduced interest,” he said.
Since BDIC started, Chugh said it has built up an $8-million surplus in its loan portfolio, with the goal of being able to provide loans without assistance from the GNWT within the next decade or so.
“You can literally call it a turned-around operation,” Chugh said. “Today we owe the GNWT $8 million less than what our clients owe us. If this trend continues in the future, we’ll have our own loan fund, from which we could give loans without borrowing money from the GNWT.
“It’s hard to put a time frame to it because of the changes in the economy…In Canada, it doesn’t look that good in the next couple of years; there will be some challenges.”
BDIC operates by loaning money from the GNWT to community businesses. It also operates by supporting subsidiary companies and venture investments.
“We took it on ourselves to challenge that every province and territory in Canada should have at least a minimum one outlet – one gallery or gift shop – which would be selling NWT subsidiary products,” Chugh said.
“We achieved that; today we have 56 galleries across Canada and some in Alaska, at no extra cost to us or the government. It’s free promotion for the NWT.”
Working towards improvements
In 2013, an external audit on BDIC revealed it to be overfunded and under-utilized. However, complaints by the GNWT and the company that the report was not done properly – comparing BDIC to a private loan company or bank rather than a government-funded operation – led to a second audit that, while still critical, painted a brighter picture.
One of the top criticisms of BDIC is that it doesn’t go far enough to reach into what it calls “Level II” communities, those small towns and hamlets located outside of the city centres. Once clients are able to access some of the credit facilities programming, some complain they face long wait times between filing applications and receiving loans.
Both reviews pointed to a lack of self-reporting mechanisms to determine the success and outcomes of the loan programs.
Additionally, while some of its Credit Facilities loan programming was determined to be very popular and high-functioning, some components like the winter/summer re-supply financing and the seasonal production financing specialty term loans were viewed as low-performing and a drain on funds. The reports also noted that marketing efforts to make new businesses aware of the options available to them were lacking.
Chugh acknowledged the shortfalls, noting that community outreach, marketing and holistic reporting mechanism improvement initiatives are already in the works.
“We had implemented quite a few changes and a lot of things on our own, but because they were not completed at the time of the review they came as a recommendation, but a lot of them are already in place by now,” he said. “There are definitely some that can still definitely be looked at. There’s always room for improvement no matter what, and that’s our goal: to keep improving.”
For instance, creating business opportunities in the Level II communities is listed as a top priority for BDIC. One way the organization is facilitating their development is through pilot projects testing long-distance business education through teleconferencing and providing business mentors. BDIC is also looking at community banking initiatives, to get funds flowing through those communities.
“I definitely have some goals to achieve that the board has set up for me,” Chugh said, looking forward to the BDIC’s next 10 years. “If these things can be achieved, I will be happy to retire.”