BBDC solves technical glitch, but still needs more cash
“It’s been fixed. It’s solved. It’s really not an issue”
A glitch in the Baffin Business Development Corporation’s accounting software short-changed about a dozen clients during the 2003 and 2004 fiscal years, delegates heard at the BBDC’s annual general meeting in Iqaluit last Sunday.
The calculations were out by a few hundred dollars over the course of a year, so the problem didn’t involve large sums of money, said Bob Long, the corporation’s general manager.
“It’s been fixed. It’s solved. It’s really not an issue.”
Still, it’s an embarrassment for Long, a former banker. The profession prides itself in precise calculations, down to a fraction of a penny.
To solve the problem, the corporation’s finance officer calculated the amount due from clients with Excel spreadsheets every month, producing thick sheaves of paper, but no mistakes. The company that designed the accounting software will provide an update shortly that will fix the bug.
Inaccuracies in client statements were first noticed in 2003, but the source of the problem wasn’t found until the end of the following year, when a new auditor got to the root of the problem.
The corporation didn’t need to worry about asking for money back from clients: “In this case, all the errors were in our favour,” Long said.
The BBDC is one of several organizations that loan money to businesses starting up in Nunavut, but the organization could use a money injection itself.
The biggest challenge the corporation faces is a lack of capital to lend.
Another similar organization is the Nunavut Business Credit Corporation, which doles out larger loans and, unlike the independent BBDC, is a Crown corporation.
Last year the credit corporation loaned $1 million to the BBDC, so it could lend more money to its clients. By now, all that money is loaned out as well.
Mel Orecklin from the Nunavut Business Credit Corporation said both organizations help fill the vacuum left when banks aren’t interested in lending to Nunavummiut who plan to start their own business. Banks are conservative organizations that aim to have only a fraction of one per cent of their loans default.
“Here, they’re really not interested in talking to you. It’s very unfortunate,” Orecklin said.
In comparison, development agencies like the BBDC aim for a default range of about 10 per cent, said Long. Another goal is to get new businesses on their feet, so that one day they will be “bankable.”
Another solution to their capital shortage was to sign a memorandum of understanding last year with another development organization, the Atuqtuarvik Corporation, to help lend their money out to Inuit-owned businesses.
The amount of money the BBDC lends to clients has doubled over the last five years. Three quarters of that money is loaned to businesses in Iqaluit. Most of that money goes towards construction.