Cascador and Sterling Bank have launched a $200 million SME Credit Backstop Fund designed to help small and medium-sized enterprises (SMEs) in Nigeria overcome barriers to financing, expand their operations, acquire productive assets and create jobs.
The fund, which provides a credit-risk backstop to participating lenders, aims to support up to $1 billion in outstanding credit capacity when fully deployed, creating a structured financing channel for businesses with proven growth potential but limited access to commercial loans.
Under the arrangement, eligible SMEs will initially be able to access local-currency loans equivalent to $250,000, with the potential for loan sizes of up to $1 million as the fund becomes fully funded. Financing will be structured around businesses’ cash flows and repayment capacity, subject to lenders’ approval.
A key benefit for SMEs is the prospect of accessing larger, longer-term loans with reduced collateral and guarantee requirements, easing one of the major constraints facing Nigerian businesses seeking to scale beyond their current operations.
The initiative brings together Cascador’s experience in identifying and supporting high-potential businesses and Sterling Bank’s lending infrastructure and credit-market expertise to address the risks that often discourage financial institutions from extending substantial credit to SMEs.
Across Sub-Saharan Africa, only 22 per cent of businesses have a bank loan or line of credit, compared with the global average of 36 per cent, according to Cascador’s white paper, The Multiplier Model. The report highlights the limited availability of suitable debt financing as a factor pushing businesses to rely more heavily on equity to fund growth.
Trish Thomas, Chief Executive Officer of Cascador, said Nigerian entrepreneurs had the talent and innovation to build successful businesses but were often constrained by a lack of capital suited to their stage of development.
“The SME Credit Backstop Fund aims to transform potential into a reality by bringing the experience and capital of the ecosystem to create a practical route to debt for Nigerian businesses with proven traction,” Thomas said.
She explained that sharing credit risk with lenders and using the trust built by business-support organisations could help more companies secure the financing required to expand and generate employment.
The fund will also bring together venture funds, business studios, philanthropic organisations, impact investors and development-finance institutions within a common risk-sharing framework. These partners will help identify qualified businesses and mobilise capital to support the fund’s guarantee reserve.
Obinna Ukachukwu, Group Executive at Sterling Bank, said the initiative would strengthen lending decisions by combining credit protection with a pipeline of businesses recommended by venture funds and studios familiar with their operations and development.
According to him, the arrangement would complement lenders’ independent credit assessments with structured risk-sharing, due diligence and ongoing portfolio monitoring, giving participating institutions greater confidence to extend larger and longer-term loans.
For SMEs, this could translate into more financing options for purchasing equipment, expanding production, strengthening distribution networks, entering new markets and investing in other productive assets, depending on each business’s needs and loan approval.
The model will operate through four stages. First, SME ecosystem partners will identify and nominate businesses that meet the fund’s debt-readiness requirements. The fund will then apply its eligibility, guarantee and portfolio-risk standards, using artificial intelligence-powered underwriting and due diligence to assess applicants and determine the level of credit protection available.
Participating financial institutions will retain responsibility for independently assessing borrowers, approving and disbursing loans, as well as servicing, monitoring and collecting repayments. The fund will provide an agreed level of protection against losses on approved loans.
This structure is intended to ensure that the credit backstop reduces lending risks without replacing banks’ credit decisions or removing borrowers’ repayment obligations.
Iyinoluwa Aboyeji, Founding Partner of Future Africa, said the initiative addressed the need to combine equity financing with debt and other long-term funding instruments to help businesses grow sustainably.
He noted that Future Africa had supported more than 100 companies over the past 12 years, adding that businesses needed access to different forms of capital to acquire productive assets, expand their operations and create jobs.
The fund will operate through Riverwell Platform Holding Limited and Riverwell Platform Services Nigeria. The Nigerian operating company will coordinate partners, assess business readiness, collect data and oversee portfolio monitoring and reporting, while reserve capital supporting the credit backstop will be held and managed separately.
Ukachukwu will serve as a director on the Riverwell platform, contributing banking expertise to financing structures, credit-risk oversight and portfolio monitoring.
The initiative builds on a Catalytic Fund model piloted by Cascador and Sterling Bank over the past two years, with Cascador acting as nominator and guarantor and Sterling serving as lender. The new platform will be independently managed and designed to accommodate a wider range of ecosystem partners.
Since 2019, Cascador has supported 80 ventures that have collectively raised more than $150 million in capital. In 2025, its alumni served more than 1.7 million customers and directly employed almost 4,000 people.
By providing a structured bridge between business development support and commercial lending, the SME Credit Backstop Fund seeks to help established Nigerian enterprises move beyond early-stage financing and secure the capital needed to scale, strengthen productivity and contribute to economic growth.