'Some have built up three years of debt': Businesses on the brink ahead of Christmas

A NUMBER of Cork businesses are fighting an uphill battle against accumulated debt as they take drastic measures to save their livelihoods, a co-ordinator for St Vincent De Paul (SVP) in Cork has warned.

Gerry Garvey told The Echo that the charity is supporting a small cohort in the business community who are going without at home as a last-ditch attempt to continue paying employees and meet the costs of overheads.

The SVP south-west regional co-ordinator explained that for some, their business is more than just a source of funds and holds sentimental value. Some in this position are under mounting pressure to maintain tradition and respect family legacies.

Mr Garvey is urging people to support small and local businesses this Christmas amid worries that January could signal the death knell for many small retailers and hospitality venues.

“We believe that some businesses are going to go now, but it’s only after Christmas that the real fallout will be evident,” he said.

“While we might have a good Christmas, some have built up three years of debt. Many won’t be able to generate enough to cover that,” said Mr Garvey.

“As business owners assess the situation in the cold light of day it’s possible that they will cut their losses and walk away. It’s hard in particular for people with family businesses that are hugely sentimental to them.”

Mr Garvey said that during the Covid-19 pandemic, many businesses were allowed to warehouse some of their debts, “whether that was Vat or income tax”.

Warehousing of tax debt was aimed at assisting businesses that experienced cash flow and trading difficulties during the Covid-19 pandemic. Under the scheme, it was possible to defer paying some eligible tax liabilities until the business was in a position financially to deal with the debt.

“They were billing people but also allowing the opportunity for warehousing. This went on for years and revenue have written to them all in relation to warehousing debt.

“Our suspicion is that this is going to trigger issues because a lot of small businesses and self-employed people haven’t been able to plan how they are going to pay off that money.”

Mr Garvey said he fears the impact may be similar to the last recession. “In the last recession, we were seeing people with very good quality cars sitting without tax and insurance outside their houses because they couldn’t afford to run them. Behind closed doors they might have no food in the cupboard. They are just working to pay their bills and employees.

“People will tell you that if they can cover their costs in January then they are doing well. If you take the continuing war along with Brexit and supply problems in the economy then you are seeing exactly how much people have to contend with now.”

Mr Garvey urged anyone experiencing dire financial difficulties to reach out to the confidential charity.

• To find out more about St Vincent De Paul and access details, or to donate, visit SVP.ie
• The charity is set to announce details of its annual car draw in the upcoming days.