Don’t be afraid of zombies: Debt sustainability is not a problem for 95% of SMEs in Germany

The debate around a growing number of zombie companies in the SME sector is not new. Such concerns were recently exacerbated by the fact that the predicted wave of insolvencies driven by the coronavirus crisis did not eventuate. However, a special analysis conducted by the KfW SME Panel has revealed that those concerns appear to be unjustified. Only around four per cent of small and medium-sized businesses in Germany show a critical debt sustainability level. Their low profitability does not allow them to meet their interest obligations. Nothing indicates that the share of financially weak enterprises may have grown in the crisis years. In addition to economic support packages, adaptability, innovativeness and robust earning power even in times of crisis along with a broadly solid financial basis have enabled SMEs to get through the crisis well.

Don’t be afraid of zombies: Debt sustainability is not a problem for 95% of SMEs in Germany(PDF, 113 KB, accessible)