A federal agency may face losses on a $400,000 loan made last year to a Bedford, Nova Scotia, company whose co-owner said the business is unprofitable and should be dissolved.
The Atlantic Canada Opportunities Agency, which makes grants and no-interest loans to businesses, non-profits and local governments in the Maritimes, lent the money in March 2022 to Aquamedia Inc., a cleaning-products concern, as an "unconditionally repayable contribution." The money was to be used to "purchase equipment and complete renovations to support business growth," according to online government records.
AllNovaScotia reported in October that Ronald Anaka, who owns 50% of AquaMedia, asked a provincial judge to dissolve the business.
"AquaMedia is not a profitable company," the publication quoted Anaka as saying in court papers. "The cleaning product was never appropriately marketed and there are no current business orders to generate income."
Anaka is squabbling with co-owner Barry Munro, who AllNovaScotia reported today is challenging Anaka's proposal to liqudate AquaMedia. An attorney for Munro is quoted by AllNovaScotia as saying: "Dissolution and liquidation is not the most equitable solution."
Munro is the president of AquaMedia and Anaka the vice-president, according to Nova Scotia's corporate registry. The company's business name is AquaNaka Cleaners.
Data suggests that upwards of 20% of the dollar amount of ACOA loans are never recouped, and the figure may be higher. A 2007 study from the Fraser Institute found that 63.5% of ACOA loans were outstanding from the 10-year period ended in 2006. ACOA’s own research from 2014 showed that 22% of the dollar amount of interest-free loans made between 1995 and 2014 under the agency’s business-development program was defaulted on, written off or forgiven, while 53% was repaid and 25% remained outstanding. ACOA has said the chart is no longer made available to the public.
As a comparison, 3.3% of the Business Development Bank of Canada's loan portfolio consisted of bad loans in 2019 and default rates on bank loans were even lower, according to the National Post. The BDC is a crown corporation that makes loans to businesses.
In February of this year, AquaMedia received an $11,250 grant, also from ACOA, to "develop a strategic growth plan and provide business strategy mentoring." Last year, the company received a $20,000 grant under another federal program that assists "small- and medium-sized enterprises seeking to develop new export market opportunities and markets, especially in high-growth emerging markets."
--HBB