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Coronavirus crisis has hit German SMEs with force: turnover losses in March amounted to EUR 75 billion

Press Release from 2020-04-28 / Group, KfW Research

  • 2.2 million small and medium-sized enterprises have been affected
  • Half of SMEs will run out of liquidity reserves by the end of May
  • Representative survey by KfW Research at the beginning of April

The coronavirus crisis has hit German SMEs with force. Business closures, travel restrictions and physical distancing rules have led to a collapse in turnovers, depleting cash reserves and uncertain business prospects. It is posing an existential threat for many small and medium-sized enterprises, as highlighted by the current representative special survey carried out by KfW Research on the basis of the KfW SME Panel in the first week of April. More than 2.2 million SMEs (58%) suffered a slump in turnover in March as a result of the coronavirus containment measures. On average, turnover typically expected in March was down by around half (53%), or roughly EUR 39,000 per enterprise. SMEs thus lost approx. EUR 75 billion or 2% of their annual turnover in March. If turnover declines continue on a similar level, half of SMEs will run out of liquidity reserves by the end of May.

“The current gradual rollback of coronavirus lockdown restrictions gives hope that the situation will improve for SMEs. Many can now get back to business. But most will not be able to simply get back to pre-coronavirus levels as they will likely have to contend with lower turnovers and liquidity shortages in the coming weeks as well”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW. “State aid and KfW liquidity measures will therefore remain necessary and helpful for small and medium-sized enterprises. They mitigate the impacts of the coronavirus-induced standstill and enable businesses to hold out for longer.”

In detail, the KfW analysis revealed that smaller businesses were slightly more often affected by declines in turnover in March (58%) than larger SMEs with more than 10 employees. Service providers complained more about drops in turnover than other sectors. At the same time, turnovers stayed roughly the same for 40% of SMEs. Most of these were large SMEs, particularly from the skilled trades sector and construction firms. A small share (2%) of SMEs even posted higher turnovers, among them R&D-intensive manufacturers and retailers.

The declines in turnover have put significant pressure on companies’ liquidity, with 44% reporting a drop in their liquidity reserves as a consequence of the coronavirus crisis. The analysis revealed for all SME size classes and sectors that as from 1 April 2020, around half of all enterprises will run out of liquidity in two months if the current situation continues with no improvement. After that, they may have to suspend trading or close down permanently. Four per cent have enough cash for only 1-2 weeks, while 14% can hold out for up to one month.

Besides declines in turnover and liquidity bottlenecks, the coronavirus-induced standstill is having further impacts that are making life hard for SMEs. One fourth of SMEs have suffered business disruptions from losing employees, with 18% reporting a reduced sales area, 17% struggling because of disrupted supply chains, and 14% closing down completely.

In spite of all the tough coronavirus restrictions: The SME sector’s resilience to unexpected developments has increased hugely in the past decade. “SMEs have done their homework and significantly improved their equity base in the past years”, said Dr Fritzi-Köhler-Geib. “The financial buffers they built up in the past years are helping them to absorb losses in the current crisis and reduce pressure on liquidity.”

On average, the equity ratio of small and medium-sized enterprises increased by 13 percentage points between 2002 and 2018 to now 31%. High equity ratios and the resulting improved creditworthiness are also likely to help businesses access debt capital more easily in the current situation, for example in order to bridge any liquidity bottlenecks. As many SMEs had moderate debt levels at the beginning of the crisis (average debt ratio 68.8%), the risk that increased borrowing may push a large portion of businesses into excessive debt is manageable.

The database:

The current analysis by KfW Research is based on a special survey performed as part of the KfW SME Panel. The Financial Services Division of GfK SE conducted a representative survey of small and medium-sized enterprises with up to EUR 500 million annual turnover on the current impacts of the coronavirus crisis on behalf of KfW Group between 6 and 14 April 2020.

All enterprises that had already participated in an earlier wave of the KfW SME Panel and had provided a valid email address were surveyed. Responses from a total of 3,400 enterprises were evaluated (response rate approx. 50%). As the supplementary survey was linked to the main database of the KfW SME Panel, its results provide a representative picture of the current coronavirus impact on SMEs.

The current special survey by KfW Research on the impact of the coronavirus crisis on SMEs is available at www.kfw.de/fokus


Portrait Christine Volk


Christine Volk


+49 69 74 31 38 67


+49 69 74 31 32 66