Small and medium-sized businesses in Germany are very optimistic about the next six months. Currently, one in three companies expects business conditions to improve during that period. Thanks to this positive sentiment, 81 percent of small and medium-sized enterprises plan to invest in their businesses over the next six months. This is shown by a recent study conducted by the Federal Association of German Volksbanks and Raiffeisenbanks (BVR), DZ BANK, and WGZ BANK.
Encouraging news for the long-term outlook: The existing preferential terms for SME financing will remain in place. The so-called SME supporting factor has passed the review, as recently announced by Jonathan Hill, EU Commissioner for Financial Stability, Financial Services, and the Capital Markets Union. The SME correction factor was introduced as part of the European Capital Requirements Regulation implementing Basel III.
The capital requirements for banks regarding SME loans (up to 1.5 million euros) will therefore continue to be multiplied by a factor of 0.7619. This means a bank need only set aside about three-quarters of the capital that would otherwise be required as a risk reserve for an SME loan it has granted.
“Small and medium-sized enterprises will therefore continue to have easier access to loans than large corporations,” says Christian Fahrholz, head of the Money and Currency, Corporate Finance, and Business Security Division at the DIHK. Currently, the situation on the credit market is relatively relaxed—thanks to low interest rates on loans and high equity ratios among small and medium-sized enterprises. According to a DIHK survey, the overwhelming majority of companies rate their access to financing as good or satisfactory. Among companies facing difficulties, just under one-third view the required proportion of self-financing as an obstacle to accessing credit. A lack of collateral is also a reason for difficulties in obtaining debt financing from banks, says DIHK expert Fahrholz.
The situation is particularly challenging for small firms in some cases. According to a DIHK study, 60 percent of small businesses with up to ten employees and 59 percent of companies with up to 20 employees reported having encountered problems obtaining bank financing for innovation projects.
The picture is similar when it comes to company acquisitions. According to a special DIHK survey, nearly one in two potential buyers complains that an acquisition is difficult due to a lack of financial support from banks. Here, too, the lack of suitable collateral and the absence of the necessary equity contribution are responsible for poor or no access to debt financing.
