Medium-sized businesses are becoming increasingly hesitant to take out loans.

A recent study has revealed that fewer and fewer medium-sized businesses are taking out loans. This is the lowest level in ten years. The reason is the uncertain economic situation.

More and more CEOs of small and medium-sized enterprises (SMEs) are declining to take out a loan from a bank or savings bank. Only 27 percent are generally willing to accept a bank loan – compared to 42 percent in 2023 and as high as 66 percent in 2017. This is according to a special survey conducted by the KfW SME Panel in January 2026. The survey included companies from all sectors with annual revenues of up to €500 million.

"Medium-sized companies currently have a very strong desire for financial stability and independence," says Dr. Dirk Schumacher , Chief Economist at KfW. "The difficult economic situation and the uncertain economic outlook mean that many companies are acting very cautiously and refraining from taking on new debt."

Debt? Better not.

Sixty-three percent of respondents say they want to avoid debt altogether – significantly more than in 2017 (40 percent) or 2023 (36 percent). Half of all businesses state that they do not plan to use any external financing. In 2017, this was true for only 15 percent, and in 2023 for 27 percent.

For the past three years, medium-sized businesses have reported that banks apply above-average standards during loan negotiations . Thirty percent complain that lenders demand too much documentation and information. In 2023, only 17 percent felt the same way.

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Small businesses should be especially careful.

Small businesses , especially those with up to ten employees, are hesitant to take out loans. Only 27 percent of them now intend to do so – compared to 69 percent in 2017 and 41 percent in 2023. Among larger medium-sized companies with more than ten employees, interest remains fairly stable at 56 percent.

The decline is evident across all sectors, but service providers are particularly hard hit. Only 21 percent of them are considering a loan – compared to 73 percent in 2017 and almost 40 percent in 2023. 36 percent of companies report that they have sufficient equity capital and therefore do not need a loan – in 2017, this was only one in five.

" It's a positive sign that more companies than a few years ago consider their equity capital sufficient for their investment projects," says Schumacher. "However, the overall investment needs of SMEs are so high that external capital will be indispensable to secure the future of many companies. Without the fundamental willingness of SMEs to take out loans, necessary investment projects are at risk of not happening."

Source: KfW Research

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