Germany’s economy remains under strain. Growth is weak, competitiveness has declined and exports are no longer the reliable growth engine they once were. These developments are hitting small and medium-sized enterprises (SMEs) particularly hard. Companies are required to digitalise, improve energy efficiency and embed sustainability into their business models – all while dealing with geopolitical uncertainty, higher energy prices and structural bottlenecks such as skilled labour shortages.
The SME Diagnosis 2025, published by the German Savings Banks Association (DSGV), provides a comprehensive picture of this situation. Based on representative data and the Deka S-Financial Climate Index, the study highlights both the pressures SMEs are facing and the strategic options available to them.
Economic sentiment among Savings Banks has cooled slightly, mainly due to weaker expectations for the months ahead. US tariff policies and the lack of far-reaching structural reforms in Germany continue to weigh on confidence. At the same time, the assessment of the current business situation has stabilised, and demand for credit is rising again.
In the first half of 2025 alone, Savings Banks committed more than EUR 43 billion in new loans to businesses and the self-employed – a clear sign that many SMEs are once again willing to invest. Financing bottlenecks are no longer the central issue; instead, the focus is shifting to where and how companies invest.
The study makes one thing clear: strengthening competitiveness increasingly requires a dual strategy. On the one hand, SMEs must invest in transformation – particularly in digitalisation, energy efficiency and sustainable production. On the other hand, they need to rethink and expand their international business activities.
While international business still plays a relatively limited role for many SMEs, interest is growing. Companies are becoming more cautious about the US market and are increasingly looking towards Europe and Asia. At the same time, demand for advice on legal, regulatory and financial issues related to cross-border activities is rising.
With their regional presence, close customer relationships and international expertise, the Savings Banks and their partners play a key role in this transformation. They support SMEs with tailored financing solutions, risk hedging, currency management and access to international networks – from the first idea to implementation on site.
Transformation financing is another central pillar. Specialised instruments such as S-Transformation Loans and Leasing solutions enable SMEs to invest in sustainable projects without overburdening their liquidity. Importantly, financing is combined with advisory services and clear classification frameworks, helping companies navigate regulatory complexity and turn sustainability into a strategic advantage.
The SME Diagnosis 2025 sends a clear message: German SMEs are under pressure, but they are not without options. Transformation and internationalisation are no longer optional – they are becoming essential prerequisites for long-term success.
What companies now need are reliable framework conditions, less bureaucracy and strong financial partners who understand their business models and regional realities. With the right support, SMEs can turn today’s challenges into tomorrow’s opportunities – and remain the backbone of a competitive, sustainable German economy.