Interest Rates and Investment: What Rates Mean for Your Sales Team

Why are your customers postponing investments right now?

The quote has been with the customer for eight weeks. The technology fits, nobody questioned the price, and still there is no signature. “We'll wait and see how interest rates develop,” they say on the phone. Anyone selling capital goods, meaning machines, equipment, vehicles, or larger software projects, has heard this sentence more often since 2022.

The sentence sounds like a clear cause. Often there is more behind it: uncertainty about the customer's own order book, a bank that checks more strictly, or simply a lack of urgency. If sales only looks at interest rates, it argues past the real problem. The guiding question of this article is therefore: how strongly do interest rates actually hold back your customers' investments, and how do you argue in sales when a customer wants to wait? To answer it, we first trace how interest rates have developed since 2022 and how strongly investment responds to them, then look at access to credit, and finish with the investment light, the calculation for the customer, and the role of financing and subsidies.

How have interest rates developed since 2022?

Interest rates in the euro area are set by the European Central Bank (ECB). Its key policy rate at present is the deposit facility rate, the rate banks receive on money held at the central bank. It had been minus 0.5 percent since September 2019. From July 2022 the ECB raised it in quick succession to 4 percent in September 2023.

From June 2024 the ECB cut the rate in eight steps to 2 percent in June 2025. In June 2026 it raised it again to 2.25 percent, and in September 2026 to 2.5 percent. It cited the conflict in the Middle East, which it said continued to create inflationary pressure. In September the ECB expected euro area inflation of 3.0 percent for 2026. On October 29, 2026 it left rates unchanged and did not commit to any particular rate path.

For your customers this means the era of almost free money is over, and nobody knows whether the next move will be up or down. In the sales conversation, this uncertainty often weighs more than the level of interest rates itself.

Do investments really react that strongly to interest rates?

Textbooks say that when rates rise, fewer investments pay off. In practice the relationship is surprisingly weak. Sharpe and Suarez (2021), two economists at the US Federal Reserve, analyzed a survey of chief financial officers at US non-financial companies from September 2012. Respondents were asked by how much their financing costs would have to fall or rise for them to change their investment plans for the coming year, with demand held constant.

68 percent would not have invested more under any conceivable rate cut. Respondents reacted somewhat more strongly to increases, but even then only 16 percent would have cut back at one percentage point more. The most common reason, given by more than a third of the insensitive companies, was ample cash of their own. Others said they were guided by demand or by long-term plans.

It is revealing who did react: companies that planned to borrow in the coming year and those that named liquidity as their main concern. Companies with strong growth prospects, by contrast, reacted less to interest rates. The authors themselves point to the usual limits of surveys. The data also come from the US and from a period of low rates, when many firms considered rates low anyway. Transferring this to German SMEs calls for caution.

A second finding fits the picture. Frey and Heilmann (2026) show for the DAX 40 companies that their published cost of capital stayed between 7 and 8 percent while the yield on ten-year German government bonds fell from 4.1 to minus 0.2 percent. Many companies therefore work internally with minimum returns that barely move with market rates. A project that only pays off at zero interest would not have passed internal review at many companies even back then.

Interest rates are rarely the reason a customer does not buy. They are often just the most polite reason they can give.

Why does access to credit matter more than the rate itself?

For many small and mid-sized businesses, what counts is less what a loan costs than whether they get one at all. KfW, Germany's state-owned development bank, measures this quarterly together with the ifo Institute in the so-called KfW-ifo credit constraint indicator.

40.5 percent was the highest value since the survey began in 2017. KfW attributed this to the weak economy, which it said had worsened equity ratios and credit ratings. In the third quarter of 2026, according to KfW, banks eased their standards slightly, but barriers remained high by historical standards. Small and mid-sized companies remained reluctant to take on new loans, mainly because of uncertainty and concern about additional debt.

For your sales team this means a customer who hesitates “because of interest rates” may have a completely different problem. Perhaps their bank wants more collateral, perhaps they do not want to touch their reserves. You cannot solve either with a discount.

The investment light: which customer needs which argument?

So that you do not argue the same way with every customer, I use a simple classification, the investment light. It asks two things: how does the customer finance, and why are they investing at all? You usually get the answers in the second meeting if you ask openly.

You want to serve green customers quickly because their need is pressing. With yellow customers, the quality of your groundwork decides. Red customers do not leave the pipeline, but they belong in it with a realistic probability and a fixed follow-up date. The guide Pipeline management for SMEs describes how to maintain stages and probabilities.

How do you show the customer the numbers?

With yellow customers in particular, you win by doing the calculation they need for their bank anyway. Cost savings are a strong argument in tight times. De Blick, Paeleman, and Laveren (2024) analyzed 2,973 observations of small and mid-sized companies from 34 European countries. Firms with difficult access to external financing more often introduced cost-saving innovations in processes and organization: a quarter did so overall, and a third among firms that saw financing as their most important problem. These innovations went hand in hand with higher revenue growth.

A worked example shows how little the interest rate often matters. A piece of equipment costs 200,000 euros and saves the customer 50,000 euros a year in materials, energy, and working time. Financed over five years, interest costs at 4 and at 6 percent differ by around 11,000 euros over the entire term.

The payback period, the time until savings have recovered the purchase price, is four years in this example. The higher rate extends it by a few months. If you prepare this calculation cleanly and with the customer's own figures, you take the edge off the interest rate argument.

1. Collect figures from the customer

   Ask about consumption, scrap, hours, and downtime of the old solution. Don't estimate; get actual numbers.

2. Calculate savings conservatively

   Use the lower bound. A calculation that is exceeded in practice builds trust for the next order.

3. Show payback and the rate range

   Put payback side by side under two interest assumptions. The customer sees how little the rate changes the outcome.

4. Provide documents for the bank

   Summarize investment, savings, and payback on one page the customer can hand to their bank.

What role do financing and subsidies play in the quote?

Many capital goods suppliers work with leasing companies or banks and can state a monthly payment in the quote alongside the purchase price. For customers with tight liquidity, this shifts the question from “Can we afford it?” to “Do the savings cover the payment?” Whether leasing, hire purchase, or a loan is cheaper for the customer depends on their tax and accounting situation. They make that call with their tax advisor, not with you.

Subsidy programs can also play a role, such as KfW development loans applied for through the customer's own bank, or grants for energy efficiency. Programs and conditions change frequently. Mention the possibility in the conversation and refer to the official bodies instead of promising terms or eligibility yourself.

With fluctuating rates and prices, it also pays to limit how long quotes are valid. The guide Quotes that win describes how to structure and follow up on quotes. How price conversations have changed since the inflation surge is covered in After inflation.

What you can do this week

You cannot influence interest rates. How well you guide your customers through an uncertain phase is up to you. When a lost quote was blamed on interest rates, it is also worth taking a second look, as described in the guide Analyzing lost deals.

• Classify all open quotes above a threshold using the investment light: green, yellow, or red.
• For every yellow customer, ask whether they need financing and what their bank needs for the decision.
• For your most important product, create a template for a savings calculation with payback under two interest assumptions.
• Check with a leasing or financing partner whether you can state an example monthly payment in the quote.
• For red customers, agree on a fixed follow-up date instead of easing off or giving a discount.
• Check how long your quotes are valid and shorten the period where costs fluctuate.

Taken together: interest rates hold back investment less than the sentence on the phone suggests. According to the findings cited, it is mainly companies that need loans or worry about their liquidity that respond, and for small businesses whether they get a loan at all often matters more. In sales, a calculation the customer can also present to their bank therefore helps more than an argument about interest rates. Part of the data comes from the United States, however, and can be transferred to German businesses only with caution.