Small and medium-sized enterprises (SMEs) in Germany are facing increasing challenges in accessing loans, according to recent findings. In the fourth quarter of 2024, 32% of SMEs interested in debt capital reported restrictive behavior from banks. This marks the highest level since a new survey methodology was introduced in 2017. A similar trend was observed among large enterprises, with a record-high share reporting difficult loan negotiations three months prior. This share decreased slightly by 2.6 percentage points to 31.9% in the fourth quarter.
The KfW ifo Credit Constraint Indicator, which analyzes data collected by the ifo Institute's economic surveys by size classes and sectors, revealed these insights.
Wholesalers reported an increase of 11.9 percentage points to 36.7%, manufacturers saw an increase of 2.2 percentage points to 33.4%, and retailers experienced a rise of 3.6 percentage points to 37.2% in strict bank lending standards among SMEs.
“Businesses in these sectors are operating in a poor trading environment and have weak sales expectations. Many are therefore planning to cut jobs,” said Dr Jenny Körner, financial market expert at KfW Research.
Despite falling interest rates leading to a slight increase in interest for loans among SMEs and large enterprises, credit demand remained below the long-term average in the fourth quarter. Only 21.1% of SMEs and 28% of large enterprises sought loans.
“It is obvious that the restrictive financing conditions of banks continue to weigh on credit demand," Dr Körner stated, "But an even weightier factor is probably that businesses are reluctant to lock themselves into long-term loan agreements because of the ongoing phase of economic weakness, political uncertainty and pessimistic business expectations.”
The current edition of the KfW ifo Credit Constraint Indicator provides further details on these findings.
KfW offers support to SMEs through various promotional programs on behalf of the Federal Government.