Small and medium-sized enterprises (SMEs) in Germany, known as the Mittelstand, financed 54 percent of their 2025 investment from their own funds and 32 percent with loans from banks and savings banks, according to the KfW Mittelstandspanel 2026, published on 22 October 2026 by KfW Research, the economics department of the German state-owned development bank KfW. Public development funds covered 12 percent and other sources, such as mezzanine and equity capital, 2 percent.

The 2025 financing mix

KfW counts as Mittelstand all private firms with annual turnover of up to 500 million euros, which it put at 3.94 million firms in 2025. The panel’s main survey ran from 16 February to 10 July 2026 with 10,773 firms; a special survey in early September 2026 drew 2,051 responses.

Own funds paid for 141 billion euros of investment in 2025, 11 billion euros more than a year earlier. KfW says their 54 percent share is the highest in 14 years. This year KfW split own funds for the first time: pure internal financing from profits, depreciation and reserves accounted for about 48 percent of all investment financing, intra-group financing about 4 percent and shareholder contributions about 2 percent. KfW says the change means earlier years are not fully comparable, though it considers the effect minor.

Bank loans for investment totalled 84 billion euros, about 3 billion euros more than in 2024, and their share stayed at 32 percent for the fourth year in a row. Development funds came to 32 billion euros (12 percent) and other sources to 4 billion euros (2 percent), the lowest volume KfW has recorded. In KfW’s figures for 2023, own funds covered 51 percent and bank loans 32 percent; the averages for 2004 to 2021 were 49 and 31 percent.

Fewer firms borrow, and loans are smaller

The share of investing SMEs that used bank loans fell to 24 percent in 2025, according to the panel. KfW’s 2025 panel had reported 28 percent for 2024 and 40 percent for 2004. The average investment loan fell by about 4 percent to 126,000 euros, from 131,000 euros in 2024, and 56 percent of the investment loans taken out in 2025 were for 20,000 euros or less.

KfW wrote in its press release: “Only ten percent of all Mittelstand companies and just 25 percent of investing companies held loan negotiations with banks or savings banks in 2025.” (Lens translation from German.) The most-cited reason for holding back, KfW said, was a general refusal to take on debt. The share of SMEs whose negotiations on investment loans all failed stayed at 10 percent, against a 2004–2024 average of 17 percent. Among micro-enterprises with fewer than five employees, 35 percent of those negotiating turned down at least one loan offer, up 14 percentage points.

In a special survey in January 2026, whose results KfW published on 14 April 2026, 27 percent of SMEs said they would in principle consider a bank loan to finance investment, the lowest level in ten years, compared with 42 percent in 2023 and 66 percent in 2017.

Investment and equity

Forty percent of SMEs carried out investment projects in 2025, a level KfW describes as close to the all-time low. KfW wrote: “New investment totalled 218 billion euros, three billion euros less than in the previous year (minus 3.7 percent in real terms, to 213 billion euros).” (Lens translation from German.) In nominal terms that was a decline of 1.4 percent, according to the panel. Average investment per investing SME fell to 187,000 euros, and half of all investment projects were worth 15,000 euros or less.

In the September 2026 special survey, 33 percent of SMEs said they had postponed or scaled back investment planned for 2026, which KfW says is the highest value recorded for this indicator. Firms named high prices for energy, materials and wages, uncertainty about the economy and legal requirements as the main obstacles. The average equity ratio was 30.7 percent in 2025, unchanged from 2024, while the share of firms with an equity ratio under 10 percent fell from more than 28 percent to just under 24 percent. Annual interest expense rose by 3 billion euros to 41 billion euros.

Sources and notes

Primary sources read in full: the KfW Mittelstandspanel 2026 (German, October 2026, covering 2025), KfW’s press release of 22 October 2026, the English-language KfW SME Panel 2025 (October 2025, covering 2024), KfW’s press release of 14 April 2026 on the January special survey, and the KfW Research items of 4 November 2025 and 13 January 2026; the January item covers sustainability topics in loan talks and is not used for figures here. Secondary sources read: Börsen-Zeitung reports of 22 October 2026 and 30 October 2026 on the 2026 panel, and of 10 March 2025, which reported a fall in the share of SMEs using bank loans for investment from 40 percent in 2004 to 23 percent in 2023; and a DATEV news item that republishes KfW’s 22 October release, which is the origin of the 30.7 percent equity ratio. The Börsen-Zeitung figures of 40 percent of 3.9 million firms investing and 218 billion euros of new investment refer to 2025. Börsen-Zeitung’s 30 October report gives a 2.5 percentage-point rise in the share of firms with an equity ratio above 30 percent; KfW’s release gives 1.5 points. The 2025 panel counted 615,000 SMEs borrowing for investment in 2024, about 100,000 more than a year earlier; the 2026 panel gives about 667,000 for 2025 alongside the lower 24 percent share, and Lens could not reconcile the two from the published text. The 2026 panel’s sentence on the 20-year decline in loan use contains an apparent error in its years, so the 2004 figure is taken from the 2025 panel. The OECD’s Financing SMEs and Entrepreneurs 2026 profile of Germany could not be opened (the site returned an access error) and is not used. Thumbnail photo: “Westarkade highrise, Frankfurt, Northwest view 20170226 1” by DXR via Wikimedia Commons, licensed under CC BY-SA 4.0; cropped. The Westarkade tower, part of the KfW development bank's headquarters complex in Frankfurt am Main, with the KfW name near its top. Illustrative photo.

Image: Lens chart built from the figures above. Thumbnail: DXR via Wikimedia Commons (CC BY-SA 4.0).