Jack Danylchuk
Northern News Services

Yellowknife (Nov 07/05) - If Peter Redvers had known his loan with the NWT Business Credit Corp. would become public, "I would probably pursue private borrowing to a much greater extent."

Correction A $1 million NWT Business Credit Corp. loan to 984298 NWT Ltd. financed the purchase of the old Mackenzie Hotel in 1999, not the new hotel as News/North incorrectly reported last week. The loan has been repaid. News/North apologizes for any embarrassment caused by the error. - NNSL file photo

Redvers, president of Crosscurrent Environmental Services Ltd. of Hay River, is one of hundreds of entrepreneurs who borrowed from the taxpayer-financed lender of last resort in the Northwest Territories.

"I don't have a problem with the company being listed as a borrower, but I think the amount of the loan should be a private matter," Redvers said.

Until this year when the territorial government bowed to pressure from News/North, the Business Credit Corp. made the names of borrowers public only if they defaulted on their loans.

The Business Credit Corp's successor, the NWT Business Development and Investment Corp., makes disclosure a condition of borrowing.

Like all Business Credit Corp. borrowers, Redvers had been turned down by the banks when he went looking for $200,000 to establish Crosscurrent Environmental Services Ltd.

The money was used to buy capital assets and establish companies that provide a range of services, from consulting on community economic development to environmental consulting.

"The financing was a critical component," said Redvers, who hopes to pay out the loan and move to a conventional lender, which will cost less.

"Without BCC we wouldn't have been able to do what we did. We captured contracts that would have gone to companies in the south."

When the Business Credit Corp. was absorbed earlier this year into the new NWT Business Development and Investment Corp. about a quarter of its $41.5 million loan portfolio was in trouble.

The Fish Gate Ltd. was among the failures.

The company's business of housing territorial jail inmates on Simpson Island fell into bankruptcy this spring.

"The contract we had with the Justice Department just wasn't paying enough," said Jerry Morin, Fish Gate's former president, who borrowed $270,900 to finance company operations.

"I thought we were going to get a lot of inmates, but it just didn't work out," said Morin, who now lives in Nova Scotia.

"The most we ever had was 11. I could have housed 20, but at the end there were only two."

According to the Business Credit Corp., all borrowers were canvassed for their views on making the loans public.

Ten objected and 100 agreed, but Gordon Wray said he was never contacted.

"I don't have a problem with it being disclosed. It's public money. But we were not contacted by anybody," said Wray, owner of the Black Knight Pub in Yellowknife.

The bias of conventional lenders against the entertainment and hospitality industries forced Wray to borrow $250,000 from the NWT Business Credit Corp. to finance an expansion.

"If you own a restaurant, a hotel or bar in this territory you won't get funding from banks," Wray observed.

"They just won't touch it. In the south, particularly, restaurants are high risk. Here, I can't remember the last restaurant that actually failed in this town."

Loans to the hospitality industry have been among the Credit Corp.'s most successful investments, but borrowing public money is a negative for some. Vince Brown, president of the Mackenzie Delta Hotel Group, said at least some Inuvik residents seemed critical of borrowing from the Business Credit Corp.

"I was told 'that's my money you're using'," Brown said after News/North reported that a $1 million loan was used to finance the new Mackenzie Hotel.

In fact, the money was borrowed by 984298 NWT Ltd., to buy the hotel in 1999 and was repaid before work started on the new Mackenzie Hotel, he said.