Credit boom in Germany: Companies are investing heavily again!

Credit boom in Germany: Companies are investing heavily again!

Companies in Germany are again showing a growing willingness to take out loans. According to an analysis by KfW Bank, demand for corporate loans rose “more strongly than expected” in the first quarter of 2025. The business volume of new loans grew by 4.4 percent. After declining demand in 2023, KfW forecasts further growth of 3.2 percent in corporate loans for the second quarter of 2025.

Small and medium-sized enterprises (SMEs) in particular use loans as the dominant financing instrument. In 2023, around 23 percent of investing SMEs used loans, which covered around 69 percent of the total investment amount for these companies. Although smaller companies tend to use loans less often, these loans cover a larger portion of their investments.

Economic improvements and interest rate cuts

The credit analysis shows that the economic outlook is improving due to expected interest rate cuts and declining inflation. The European Central Bank (ECB) has reduced key interest rates from 4.0 percent to 2.4 percent since mid-2024, making it easier for companies to borrow. Looking at 2025 as a whole, lending volume growth of 3.1 percent is expected in the euro zone and Germany.

A positive market development is also forecast by EY, which expects a “significant revival” of the market for 2025 and 2026, with lending growth of 4.2 percent in 2026. Despite a slight tightening of lending guidelines by German banks in the first quarter of 2025, this was less pronounced than originally planned.

Venture capital market in Germany

In connection with corporate financing, the KfW Venture Capital dashboard also reports on the venture capital market in Germany. In the fourth quarter of 2023, start-ups raised around 1.5 billion euros in 204 financing rounds. The deal volume remained constant compared to the previous quarter. Nevertheless, the number of deals fell by almost a fifth in the last quarter of 2023.

The total deal volume in 2023 was 7.2 billion euros, which is considered solid. The dashboard offers comprehensive insights into VC financing according to various criteria such as financing phase, origin of investors and technology areas, as well as analyzes of venture debt transactions.

The developments in the credit market show an overall positive trend for companies in Germany, which are increasingly focusing on the necessary financial support for investments as a result of the improved framework conditions and lower interest rates.

Further information can be found in the reports from fr.de and KfW to find.