German Banks More Reluctant to Lend to Companies

It is becoming more difficult for companies in Germany to obtain new loans. In December, 29.9 percent of companies in ongoing credit negotiations reported restraint on the part of banks – in September, that figure was only 24.3 percent. This is a finding of surveys by the ifo Institute. “Banks are gradually increasing interest rates on loans and are more reluctant to grant them,” says Klaus Wohlrabe, Head of Surveys at ifo. “The era of low interest rates is over for now. Many companies will have to get used to this and adjust how they structure their financing accordingly.”

Among service providers, as many as 34.6 percent of companies seeking credit say that banks are being more restrictive. This is most pronounced in hospitality at 67.7 percent, while in manufacturing the figure is approximately 28 percent. In retail, however, the figure is just under 21 percent.

Microenterprises and the self-employed continue to be the most affected. Almost one in two service providers in this segment reported problems obtaining loans. “The current economic situation is proving hard for a number of self-employed people. Since bank loans are still among the most important financial instruments for the self-employed, the situation is making matters worse for many of them,” Wohlrabe says.