Businesses find it Harder to get Credit
With rising interest rates and a dreaded recession, companies in Germany are finding it more difficult to obtain new bank loans. 30 percent of those companies currently negotiating a loan experienced bank reluctance in December. The credit hurdle has never been this high since the survey began in this format in 2017, the Munich Ifo Institute announced Thursday in its quarterly survey. In September it was only 24.3 percent.
“Banks are gradually raising lending rates and are more reluctant to grant loans,” said Klaus Wollrabe, head of the survey department. “The days of low interest rates are over for now.” Many companies will have to get used to it and adjust their financing structure.
Banks are taking a closer look at service providers in particular: 34.6 percent of firms seeking credit reported that financial institutions are becoming more restrictive. Again, gastronomy stands out at 67.7 percent.
In industry, the value was about 28 percent. In retail, on the other hand, it was just under 21 percent. “Looking at the economy, we don’t expect any major impacts,” Wollrabe told Reuters news agency.
“There is no credit crunch or anything like that that is expected to happen.” However, that would be particularly problematic for companies that are currently experiencing financial weakness.
“This is especially true of small businesses, which have barely survived the past few years economically and are partly dependent on new loans,” said the IFO expert. “If they don’t understand that, it could also mean bankruptcy.”
Almost every second service provider in this segment has reported problems getting new money. “The current economic situation is difficult for some of the self-employed,” said Wollrabe. “For them, the bank loan is still one of the most important financing tools.” This exacerbates the situation for many self-employed workers.
According to economists, the German economy is heading towards recession as it suffers from an energy crisis, material shortages, high interest rates and high inflation. However, hopes have been growing recently that there will not be a severe recession and that there will be a moderate recession.
The Ifo Institute, for example, expects only a slight drop in GDP of 0.1 percent this year. Also, the wave of bankruptcy that was feared in light of the difficult framework conditions has not materialized so far.