The robustness of German bank lending to the country's small and medium-sized enterprises (SMEs), the famous mittelstand sector, is often cited as a powerful success story piercing through the wider narrative of Europe's looming SME credit crunch. The popular assumption is that, while businesses in other countries battle for credit, the German mittelstand enjoy access to a steady stream of financing.
Yet a recent survey published by Commerzbank betrays what has become more than a niggling worry within the German financial sector – despite favourable borrowing rates, bank lending to SMEs is not at the level it could be. Released in May, the survey found that market uncertainties and the spiralling eurozone debt crisis have made already cautious German entrepreneurs become even more nervous about borrowing. The report warns that German businesses are, as a consequence, foregoing opportunities to expand using crucial leverage.
