The pandemic also affected firms’ financial conditions. In spring 2020, the percentage of firms that negotiated a new credit due to the coronavirus crisis was twice as high as the percentage of firms that negotiated a new credit for other reasons. Throughout the year, the share of negotiations initiated because of the crisis halved, though. Large enterprises were more likely than small enterprises to negotiate a new credit for a reason not related to the current crisis. However, there was an overall high incidence of negotiations initiated because of the crisis across all firm sizes. On the positive side, the share of firms that required a new credit and received it in the requested amount and at the desired conditions grew over the course of the year, while the share of unsuccessful credit negotiations decreased.
The coronavirus pandemic led to an unprecedented fall in sales and employment in 2020. The contraction was particularly sharp at the beginning of the crisis and during the second lockdown (in autumn/winter). The decline in sales and employment continued throughout the year, although it was less strong at the end of the year. Cash reserves decreased too, leading to a rise in the demand for credit.
After a short period of recovery, firms’ expectations deteriorated again during the second lockdown. Small firms have been particularly pessimistic, while expectations of larger firms recovered somewhat over the course of the year 2020. At the turn of the year, expectations became more negative again.
The current situation proves to be challenging for many firms in Germany. The “lack of customer demand”, the “high level of regulation or government rules”, and “closures or work restrictions due to the coronavirus pandemic” presented significant challenges for firms in 2020. At the end of last year, a large percentage of firms expected these to become central issues in the following six months, with only a slight decrease at the beginning of 2021. Large firms, in particular, judged the high level of competition as challenging.