KfW Business Survey 2020: Lending climate: Businesses were well equipped for the crisis

The financing situation of businesses in Germany was good until the outbreak of the coronavirus crisis. This was the finding of KfW Group’s Business Survey, which the bank conducted jointly with 19 umbrella organisations, trade and regional associations between December 2019 and the end of March 2020 – before the coronavirus crisis began. In the survey, a mere 13.4% of businesses reported difficulties in accessing credit, while 56.8% stated that accessing credit was ‘easy’.

“In part, this was their own achievement, as businesses in Germany have worked hard to steadily build their equity base and, thus, improve their credit rating”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW. Thus, 43.9% of the surveyed enterprises reported that their equity ratio had increased in 2019. Rating scores also improved again on a broad front, with 32.5% of enterprises reporting improved credit ratings.

The survey also revealed that bank loans remained an important source of funding for businesses, as 50.3% of companies surveyed reported having negotiated loans last year. However, the survey also revealed that internal funding continues to play the most important source of funds for businesses by far.

“Businesses were in a strong position when the coronavirus crisis hit”, emphasised Köhler-Geib. “But the record-high lending climate is now giving way to uncertain times as a result of the coronavirus. Initial indicators already point to a minor increase in credit constraints for businesses. Given the high losses in turnover in some cases, many businesses can also be expected to face a deteriorating equity outlook this financial year. This will likely exert downward pressure on credit ratings and affect access to credit.”

KfW-Unternehmensbefragung

Further Contacts:

Federation of German Wholesale, Foreign Trade and Services (BGA)

Federation of German Industries (BDI)

German Confederation of Skilled Crafts (ZDH)

German Retail Federation (HDE)