• Only 27 per cent of SMEs in Germany are considering debt capital to finance investments, the lowest share in ten years
• Micro-businesses and service providers in particular want to avoid incurring debt
• Uncertain economic situation is likely a key reason for the trend

Fewer and fewer small and medium-sized enterprises are interested in borrowing money from their bank or savings bank. Only 27 per cent of SMEs in Germany are generally prepared to take up a bank loan to finance investments, the lowest rate of the past ten years. In 2023 the share of businesses considering loan finance was 42 per cent. In 2017 it was even higher at 66 per cent.

These are some of the findings of a representative special survey conducted as part of the KfW SME Panel in January 2026. The SME Panel surveys small and medium-sized enterprises from all economic sectors with an annual turnover of up to EUR 500 million.

“Small and medium-sized enterprises currently have a very strong desire for financial stability and independence,”

said Dr Dirk Schumacher, Chief Economist of KfW.

“The difficult economic situation and the uncertain economic outlook are causing many businesses to act very cautiously and avoid incurring new debt.”

When asked about the reasons for not borrowing, 63 per cent responded that they wanted to avoid incurring debt. That was a significant 23 percentage points more than in 2017 and 27 percentage points more than in 2023. Half of the surveyed businesses said that they were not interested in borrowing as a matter of principle. In 2017 that response was given by only 15 per cent of businesses, after 27 per cent in 2023. Even so, 36 per cent reported having sufficient own funds for investments and therefore no need to borrow, whereas in 2017 that was reported by only one in five businesses. Furthermore, 30 per cent of businesses complained that banks and savings banks had excessive disclosure requirements – demanding too much information from businesses. In 2023 only 17 per cent said this.

The decline in willingness to borrow was driven almost exclusively by micro-businesses with up to ten employees, which dominate the overall trend because of their high number. Only 27 per cent of them were considering debt finance, after 69 per cent in 2017 and 41 per cent in 2023. Among larger SMEs with more than ten employees, however, the appetite for borrowing remained quite steady at 56 per cent over the years.

It is true that all economic sectors are affected by a declining interest in borrowing. But the steepest drop occurred in the services sector, where currently only 21 per cent of businesses are still considering taking up a loan, after 73 per cent in 2017 and 39 per cent in 2023.

“What is positive is that more businesses consider their own funds to be sufficient for investment projects than just a few years ago,”

said Dr Dirk Schumacher, Chief Economist of KfW.

“However, the need for investment in the overall SME sector is so high that external capital will be indispensable to safeguard the future of many businesses. Without the general willingness of SMEs to also take up loans, there is a risk that necessary investment projects will not materialise.”

The brief analysis can be found at Focus on Economics | KfW