Small and medium-sized enterprises (SMEs): Loan negotiations remain difficult

Banks and savings banks remain exceptionally restrictive when it comes to lending to small and medium-sized enterprises (SMEs), according to KfW. Demand for bank loans for investments also remains low.

This article is part of the special feature on banks and loans: What tradespeople need to know.

Roughly a third of all medium-sized businesses in Germany report difficult loan negotiations. At the same time, demand for investment loans remains low. "Business demand for loans is stagnating," according to the state-owned development bank KfW . Only one in five companies (21 percent) held loan negotiations in the first quarter of 2026. Among large companies, the figure was 28,6 percent.

“So far, we are seeing no signs of a recovery in corporate investment activity on the credit market. The uncertainty surrounding numerous geopolitical crises and the difficult economic situation in Germany is simply too great,” says Dr. Dirk Schumacher, Chief Economist at KfW . “However, it is also true that more and more medium-sized companies are not using bank loans for investment financing at all, but are instead relying on equity capital, among other sources .” Demand for bank loans among SMEs is at its lowest level in ten years.

Banks are still behaving very restrictively.

Of the medium-sized companies that conducted loan negotiations in the first quarter, 34 percent reported difficult talks. In spring 2025, this figure was 37,8 percent, an increase of 3,8 percentage points. The situation has therefore eased somewhat, but banks remain more restrictive than average. Among large companies, 29,1 percent also found loan negotiations difficult. There were no changes here.

➡️ For the KfW-ifo credit hurdle, KfW evaluates data from the ifo Institute's business surveys every quarter, differentiated by size classes and economic sectors. 

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Waiting doesn't seem to be a solution.

The KfW chief economist does not expect any easing of the situation: "In the current uncertain political and economic environment, it is quite possible that loan negotiations will become even more difficult for many companies than they are now. This is especially true if, due to the current situation, there is increased demand for loans to cover unexpectedly higher costs," says Schumacher.

Source: KfW Research

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