KfW Research: Credit access has hardly improved for small and medium-sized enterprises

• Only few businesses are in loan negotiations – despite more favourable interest rates
• Banks relaxed their lending policies only minimally
• More than one third of SMEs continue to report difficulties in obtaining loans

German businesses remain reluctant to borrow from banks. In the third quarter of 2025, only 19.5 per cent of small and medium-sized enterprises (SMEs) reported having been in loan negotiations with banks, the lowest share since the end of 2023. This is noteworthy as interest rates are now more favourable at around 3.5 per cent on average, roughly two percentage points below the peak of October 2023. The expected growth impetus from the Federal Government’s fiscal package has so far not been able to revive credit demand either.

The barriers to accessing loans remain high for SMEs in particular. Of the SMEs who were in loan negotiations, 33.9 per cent felt that banks had adopted a restrictive attitude. That share dropped for the first time after six consecutive rises. SMEs in the retail sector were particularly affected in the third quarter. Almost half reported difficulties in obtaining loans. The banks’ strict criteria are most likely due to risk considerations. The share of non-performing loans among SMEs rose to more than four per cent in the second quarter, and business insolvencies remain elevated.

The slightly more relaxed lending policies were also reflected among large enterprises, 20.4 per cent of which reported that banks were taking a restrictive approach, a drop of 1.1 percentage points.

“We don’t expect lending conditions to ease noticeably until the hoped-for economic recovery effectively takes hold and economic uncertainties decrease,”

said Stephanie Schoenwald, economist at KfW Research.

“Until that happens, banks will remain cautious and credit demand will remain subdued.”

Further information and the full study are available at: KfW ifo Credit Constraint Indicator