German Mid-Sized Businesses Struggle to Secure Bank Loans During Economic Crisis

A record 32% of companies report restrictive lending practices as banks tighten standards due to weak sales expectations and poor business conditions.

• The KfW development bank reports that 32% of mid-sized companies seeking loans in late 2024 faced restrictive lending practices, the highest level since 2017.
• Sectors such as wholesale, retail, and manufacturing are particularly affected due to declining sales forecasts and challenging business conditions.
• Despite lower interest rates increasing interest in loans, only 21% of mid-sized businesses pursued financing, well below the long-term average.
• Economic uncertainty and political instability have led many companies to avoid committing to long-term credit agreements.
• The findings are based on quarterly data from the Munich-based Ifo Institute, which surveys approximately 9,000 businesses, including 7,500 mid-sized firms.

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