The article illustrates the importance of the German Credit Guarantee Scheme to overcome credit restrictions for small and medium-sized enterprises (SMEs). By analysing the results of semi-structured interviews with German bank managers, it is demonstrated that the provision of a guarantee from a guarantee bank fosters learning by creating lending relationships and allowing a diminution of information asymmetries. Moreover, the research reveals some new aspects regarding the profitability of lending banks. The respondents indicate that profits rather decrease when a guarantee from a guarantee bank is included. However, the results also reveal that the provision of additional services (known as cross-selling) and the support of the region are considered to have a positive impact on the overall profitability and therefore on the willingness to include guarantees that make available bank loans to SMEs. Consequently, the research provides empirical results that expand existing conceptual literature.
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