Cascador and Sterling Bank have unveiled a $200 million SME Credit Backstop Fund designed to help Nigerian small and medium-sized enterprises (SMEs) secure larger, longer-term loans.

The fund will offer participating lenders a defined level of protection against losses and is structured to support as much as $1 billion in outstanding credit. Backstop structures of this kind are a longstanding instrument in development finance, in which third-party funders absorb a defined share of a lender’s potential losses, freeing banks to extend credit to borrowers they might otherwise decline.

The announcement builds on a white paper published by Cascador, titled The Multiplier Model, which argues that African businesses often struggle to scale because the capital available to them is mismatched with their stage of growth. According to the paper, only 22% of businesses in Sub-Saharan Africa hold a bank loan or line of credit, compared with a global average of 36%, and firms in the region rely more heavily on equity to finance investment than their global peers. The fund’s risk-sharing design speaks directly to that shortfall, shifting part of the lending risk away from banks and toward funders better placed to absorb it.

“N is rich in entrepreneurial talent and innovation, and yet their potential is constrained by lack of access to capital that matches where they are and what they are trying to achieve,” said Trish Thomas, CEO of Cascador. “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,” she added.

Under the partnership, Cascador — which identifies, supports and invests in businesses with the potential to scale — will contribute its ecosystem relationships, while Sterling Bank brings lending infrastructure and credit-market expertise. The initiative will also unite ecosystem partners, lenders and backstop capital providers, including philanthropic funders, impact investors and development finance institutions, within a single risk-sharing arrangement.

The process unfolds in four steps. First, ecosystem partners nominate businesses that meet the fund’s debt-readiness standards. The fund then screens candidates against its own eligibility, guarantee and portfolio-risk criteria, drawing on AI-powered underwriting and due diligence, and provides a defined backstop for approved borrowers. Lenders assess each borrower independently, approve and disburse the loans, and remain responsible for servicing, monitoring and collections.

Participating SMEs will initially be able to access local-currency loans equivalent to $250,000, with the fund aiming to unlock borrowing of up to $1 million once it is fully funded. The model is intended to deliver longer-tenor financing with a lighter collateral and guarantee burden, subject to lender approval. That dependency ties the fund’s per-borrower ceiling directly to its capitalization progress, making the pace of funding a key marker to watch as the initiative rolls out.

“At Sterling, the strength of this partnership lies in how it addresses lending risk across the entire financing journey,” said Obinna Ukachukwu, Group Executive at Sterling Bank. He noted that the structure “combines a stronger borrower pipeline with structured assessment and ongoing monitoring, giving us greater confidence to provide larger, longer-term loans.”

The fund will operate through Riverwell Platform Holding Limited, a UK-owned, technology-enabled SME infrastructure platform, and its Nigerian arm, Riverwell Platform Services Nigeria, with the reserve capital held separately. The Nigerian entity will oversee partner coordination, business-readiness checks, assessment, data collection, portfolio monitoring and reporting. Ukachukwu will also serve as a director on the Riverwell platform.

The new structure is modelled on the Catalytic Fund that Cascador, acting as nominator and guarantor, and Sterling, as lender, have piloted over the past two years. It will be independently managed.

Iyinoluwa Aboyeji, founding partner at Future Africa, said in a statement: “Equity must work with debt and long-term securities to provide builders with the capital they need to build the future.”

Cascador says it has supported 80 ventures since 2019, which have together raised more than $150 million. In 2025 alone, its alumni served more than 1.7 million customers and directly employed nearly 4,000 people. Sterling Bank directs its lending toward health, education, agriculture, renewable energy and transportation.