Interest rate cuts by the ECB: Is the investment boost for companies now coming?

Interest rate cuts by the ECB: Is the investment boost for companies now coming?

The financial world is facing significant changes, especially in Europe. The European Central Bank has reduced key interest rates in a total of eight steps since June 2024, most recently to 2.0 percent in June 2025. The official aim of these interest rate cuts is an economic stimulus to promote business and investment. Nevertheless, reality shows that the effects on corporate financing in Austria have so far been restrained. Demand for long-term investments remains weak given the economic environment.

What is particularly striking is that there has been a continuous decline in corporate loans since the fourth quarter of 2022, especially in investment financing. Despite the lower interest rates, which should theoretically make investments more attractive, the willingness of many companies to invest remains below expectations. High energy and raw material costs, geopolitical uncertainties and a subdued order backlog are significantly slowing down the willingness to invest. Lending remains difficult, even though refinancing costs have been reduced.

Challenges of corporate financing

The banks are sticking to a restrictive lending policy and are setting higher security requirements and stricter loan agreements. Small and medium-sized enterprises (SMEs), which are increasingly dependent on equity capital, are particularly affected. In 2024, the equity share was 21 percent, which is the highest value since 2015. While the share of bank loans in the financing mix is ​​around 20 to 25 percent, a decline can be observed.

The number of companies that can adequately cover their credit needs has increased. However, loan rejections often occur due to a lack of collateral or creditworthiness. Alternative forms of financing such as venture capital, leasing or crowdfunding are largely unused in Austria; Only 6 percent of companies rely on it, although interest in these forms of financing is at 12 percent. These developments make it clear that interaction between all actors – companies, banks, funding agencies and politicians – is necessary in order to act constructively and provide economic stimulus.

Financial strategies in times of interest rate changes

In order to meet the challenges of the current interest rate and economic situation, it is crucial for companies to adapt their financial strategies. This includes the diversification of financing sources and the optimization of liquidity management. Measures to control costs and increase efficiency are just as important as strengthening the equity base. In addition, companies should be able to react flexibly to changes in the capital structure and manage investments in a targeted manner.

The savings banks are the traditional main financial partners of medium-sized businesses, especially in Germany. They offer tailor-made financial solutions, including corporate loans, leasing and structured financing. Despite the challenges, there are current opportunities: Through better interest on deposits and higher returns for equity investors, companies can optimize their capital structure. The average equity ratio of German medium-sized companies is currently 38 percent, which can represent a solid basis.

Developments in corporate finance, influenced by interest rate cuts and ongoing economic uncertainty, require companies to take a proactive approach. The savings banks offer support in developing individual financial strategies and identifying competitive advantages. This is how companies can survive and grow in this challenging environment.

Further information can be found at courier and Savings Bank.