On October 14 in Lagos, Nigeria, Cascador, a platform for growth-stage founders, and Sterling Bank, a mid-size Nigerian commercial bank, announced a US$200 million SME Credit Backstop Fund. The independent platform is designed to expand access to growth capital for debt-ready Nigerian SMEs by providing a defined credit-risk backstop to participating finance partners. The partners said the model can support up to US$1 billion in outstanding credit capacity at a time.
How the Fund Expands Access
Instead of lending directly to businesses, the fund guarantees part of a lender's potential losses when an approved borrower defaults. Sterling Bank will conduct its own checks before approving loans, disburse the funds, collect repayments, and pursue borrowers who do not repay. The facility will consider businesses nominated by venture capital firms and startup studios, then apply AI-powered underwriting to assess whether each company is ready for debt.
Approved borrowers can initially access local-currency loans equivalent to US$250,000, with the fund aiming to unlock loan sizes of up to US$1 million once fully funded. The structure is intended to reduce collateral and guarantee burdens that often block small and growing businesses from formal credit. For finance partners, the backstop offers a pipeline of debt-ready businesses alongside structured risk sharing rather than direct lending.
A Response to Nigeria's Credit Gap
The initiative targets a persistent obstacle for most Nigerian startups and SMEs: access to debt. According to World Bank Enterprise Survey data cited by the partners, about 1 in 5 Nigerian businesses had a bank loan or line of credit in 2025, compared with 22% across Sub-Saharan Africa and 36% globally. Banks often view small businesses as risky and demand collateral that many founders cannot provide.
Debt has become a larger part of African startup financing even though it remains concentrated among a relatively small group of companies. Startups on the continent borrowed a record US$1.64 billion in 2025, with debt making up 41% of all startup funding, up from 17% in 2019. In the first half of 2026, startup debt reached US$614 million, about 43% of total funding.
Building on a Previous Partnership
The new fund builds on an earlier partnership between Cascador and Sterling, a US$2 million catalytic fund launched in 2025 that offered Cascador alumni debt at interest rates around 20% with lower collateral requirements. Under that arrangement, Cascador nominated and guaranteed borrowers while Sterling provided the loans. The SME Credit Backstop Fund will now accept nominations from other venture capital firms and startup studios, expanding the model beyond Cascador's alumni network.
Leadership and Governance Structure
Trish Thomas, CEO of Cascador, said the fund translates community trust into a bankable signal to lend, helping more businesses scale and create jobs. Obinna Ukachukwu, Group Executive at Sterling Bank, said the backstop and recommendations from funds that know borrowers give the bank greater confidence to provide larger, longer-term loans. Iyinoluwa Aboyeji of Future Africa added that equity must work with debt and long-term securities to equip builders with the capital they need.
The fund will operate through Riverwell Platform Holding Limited, a UK-owned technology-enabled SME infrastructure platform, and Riverwell Platform Services Nigeria, its Nigerian operating company. The Nigerian entity will coordinate partner interactions, borrower assessment, data collection, and portfolio monitoring, while a separate reserve company will hold the capital supporting the backstop. Ukachukwu will serve as a director on the Riverwell platform, bringing Sterling's banking expertise to financing structures and credit-risk oversight.
The SME Credit Backstop Fund represents a structured effort to connect Nigerian SMEs with longer-term debt while giving lenders a shared-risk route to serve a segment often considered too risky. By combining ecosystem nominations, AI-powered underwriting, and a defined loss backstop, the partners aim to mobilize up to US$1 billion in credit capacity. If successful, the model could widen access to growth capital across Nigeria and encourage more balanced financing for African entrepreneurs.