Cascador, a Nigeria-focused platform for growth-stage founders, and Sterling Bank, a mid-size Nigerian business financial institution, have arrange a $200 million fund to assist small Nigerian companies and startups get financial institution loans by sharing the chance of debtors defaulting.
The companions say the SME Credit Backstop can back up to $1 billion in loans at a time. Rather than immediately lending to the companies, it would assure a part of the financial institution’s potential losses if a borrower defaults, making it simpler for lenders to lengthen credit score to corporations they could in any other case contemplate dangerous.
The fund will contemplate companies nominated by enterprise capital corporations and studios that already back them. It will use AI-powered underwriting to examine whether or not the enterprise is prepared to tackle debt. If it approves the enterprise, the fund agrees to cowl a part of the financial institution’s loss if that mortgage goes dangerous.
The fund targets a persistent impediment for many Nigerian startups: entry to debt. About one in 5 Nigerian companies had a financial institution mortgage or line of credit score in 2025, in contrast with 22% throughout Sub-Saharan Africa and 36% globally, in accordance to World Bank Enterprise Survey data. Banks usually contemplate small companies and startups as dangerous and demand collateral that many can not present.
“By sharing risk with lenders and translating community trust into a bankable signal to lend, the fund can help more businesses access what they need to scale and create jobs,” stated Trish Thomas, Cascador’s CEO, in a press release shared with TechCabal.
Sterling will resolve whether or not to lend after conducting its personal checks. The financial institution will disburse authorised loans, acquire repayments and pursue debtors who default. The backstop is meant to scale back the financial institution’s publicity, not eradicate it.
Obinna Ukachukwu, a gaggle govt at Sterling Bank, stated the backstop, mixed with debtors advisable by funds that already know them, offers the financial institution “greater confidence to provide larger, longer-term loans.”
Borrowers can begin with local-currency loans price up to $250,000, and the fund plans to elevate that to $1 million.
The companions anticipate to elevate the backstop capital from philanthropic funders, impression traders and improvement finance establishments. The $200 million is subsequently the fund’s acknowledged measurement, whereas the $1 billion determine represents the lending capability it goals to assist.
“The future cannot be sustainably built on one layer of the capital stack,” stated Iyinoluwa Aboyeji, founding companion of Future Africa, within the assertion. “Equity must work with debt and long-term securities to provide builders with the capital they need to build the future.”
Without entry to loans, startups should rely extra closely on fairness financing to increase, giving traders possession stakes in alternate for capital. But enterprise funding has grow to be tougher to safe. Only 190 African startups raised $100,000 or extra within the first half of 2026, the lowest number since at the very least 2021. Companies unable to borrow both quit extra possession and management on the early stage or develop slowly.
Debt has grow to be a bigger a part of African startup financing, though it stays concentrated amongst a comparatively small group of corporations. Startups on the continent borrowed a record $1.64 billion in 2025, and debt made up 41% of all their funding, up from 17% in 2019. TechCabal Insights tracked one other $614 million in startup debt within the first half of 2026, about 43% of all funding. Over 5 years, 169 African startups introduced debt offers, towards almost 1,900 that raised fairness.
The new fund is designed to widen entry by letting lenders share the chance of lending to companies with income and current traders prepared to vouch for them. The transfer additionally builds on an earlier partnership between Cascador and Sterling. In 2025, they partnered on a $2 million catalytic fund that gave Cascador alumni debt at interest rates around 20%, with a lot decrease collateral necessities. At its June 2026 Pitch Day, the fund handed out greater than $5 million, together with a ₦2.5 billion ($1.7 million) debt facility to Agriarche, an agritech startup.
The new fund expands that mannequin past Cascador’s alumni. Under the sooner association, Cascador nominated and assured debtors whereas Sterling offered the loans. The SME Credit Backstop Fund can even settle for nominations from different enterprise capital corporations and startup studios.
The fund will function by way of Riverwell Platform Holding Limited, a UK-owned firm, and Riverwell Platform Services Nigeria, a Nigerian working firm. The Nigerian firm will deal with companion coordination, borrower evaluation, knowledge assortment, and portfolio monitoring. A separate reserve firm will maintain the backstop capital. Ukachukwu will function a director on the Riverwell platform.
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