Cascador, a Nigeria-focused platform for growth-stage founders, and Sterling Bank, a mid-size Nigerian commercial bank, have set up a $200 million fund to help small Nigerian businesses and startups get bank loans by sharing the risk of borrowers defaulting.
The partners say the SME Credit Backstop can back up to $1 billion in loans at a time. Rather than directly lending to the businesses, it will guarantee part of the bank’s potential losses if a borrower defaults, making it easier for lenders to extend credit to companies they might otherwise consider risky.
The fund will consider businesses nominated by venture capital firms and studios that already back them. It will use AI-powered underwriting to check whether the business is ready to take on debt. If it approves the business, the fund agrees to cover part of the bank’s loss if that loan goes bad.
The fund targets a persistent obstacle for most Nigerian startups: access to debt. About one in five Nigerian businesses had a bank loan or line of credit in 2025, compared with 22% across Sub-Saharan Africa and 36% globally, according to World Bank Enterprise Survey data. Banks often consider small businesses and startups as risky and demand collateral that many cannot provide.
“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,” said Trish Thomas, Cascador’s CEO, in a statement shared with TechCabal.
Sterling will decide whether to lend after conducting its own checks. The bank will disburse approved loans, collect repayments and pursue borrowers who default. The backstop is intended to reduce the bank’s exposure, not eliminate it.
Obinna Ukachukwu, a group executive at Sterling Bank, said the backstop, combined with borrowers recommended by funds that already know them, gives the bank “greater confidence to provide larger, longer-term loans.”
Borrowers can start with local-currency loans worth up to $250,000, and the fund plans to raise that to $1 million.
The partners expect to raise the backstop capital from philanthropic funders, impact investors and development finance institutions. The $200 million is therefore the fund’s stated size, while the $1 billion figure represents the lending capacity it aims to support.
“The future cannot be sustainably built on one layer of the capital stack,” said Iyinoluwa Aboyeji, founding partner of Future Africa, in the statement. “Equity must work with debt and long-term securities to provide builders with the capital they need to build the future.”
Without access to loans, startups must rely more heavily on equity financing to expand, giving investors ownership stakes in exchange for capital. But venture funding has become harder to secure. Only 190 African startups raised $100,000 or more in the first half of 2026, the lowest number since at least 2021. Companies unable to borrow either give up more ownership and control at the early stage or grow slowly.
Debt has become a larger part of African startup financing, although it remains concentrated among a relatively small group of companies. 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 another $614 million in startup debt in the first half of 2026, about 43% of all funding. Over five years, 169 African startups announced debt deals, against nearly 1,900 that raised equity.
The new fund is designed to widen access by letting lenders share the risk of lending to businesses with revenue and existing investors willing to vouch for them. The move also 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 much lower collateral requirements. At its June 2026 Pitch Day, the fund handed out more than $5 million, including a ₦2.5 billion ($1.7 million) debt facility to Agriarche, an agritech startup.
The new fund expands that model beyond Cascador’s alumni. Under the earlier arrangement, Cascador nominated and guaranteed borrowers while Sterling provided the loans. The SME Credit Backstop Fund will also accept nominations from other venture capital firms and startup studios.
The fund will operate through Riverwell Platform Holding Limited, a UK-owned company, and Riverwell Platform Services Nigeria, a Nigerian operating company. The Nigerian company will handle partner coordination, borrower assessment, data collection, and portfolio monitoring. A separate reserve company will hold the backstop capital. Ukachukwu will serve as a director on the Riverwell platform.
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