Cascador, a Nigeria-focused platform for growth-stage founders, and Sterling Financial institution, a mid-size Nigerian industrial financial institution, have arrange a $200 million fund to lend a hand small Nigerian companies and startups get financial institution loans through sharing the danger of debtors defaulting.
The companions say the SME Credit score Backstop can again as much as $1 billion in loans at a time. Slightly than without delay lending to the companies, it’s going to ensure a part of the financial institution’s attainable losses if a borrower defaults, making it more uncomplicated for lenders to increase credit score to corporations they may in a different way imagine dangerous.
The fund will imagine companies nominated through project capital companies and studios that already again them. It’ll use AI-powered underwriting to test whether or not the industry is able to tackle debt. If it approves the industry, the fund concurs to hide a part of the financial institution’s loss if that mortgage is going dangerous.
The fund goals a continual impediment for many Nigerian startups: get admission to to debt. About one in 5 Nigerian companies had a financial institution mortgage or line of credit score in 2025, in comparison with 22% throughout Sub-Saharan Africa and 36% globally, in line with World Bank Enterprise Survey data. Banks frequently imagine small companies and startups as dangerous and insist collateral that many can’t supply.
“By way of sharing possibility with lenders and translating group agree with right into a bankable sign to lend, the fund can lend a hand extra companies get admission to what they wish to scale and create jobs,” stated Trish Thomas, Cascador’s CEO, in a observation shared with TechCabal.
Sterling will make a decision whether or not to lend after carrying out its personal tests. The financial institution will disburse authorized loans, gather repayments and pursue debtors who default. The backstop is meant to scale back the financial institution’s publicity, no longer get rid of it.
Obinna Ukachukwu, a bunch govt at Sterling Financial institution, stated the backstop, mixed with debtors beneficial through finances that already know them, offers the financial institution “higher self assurance to offer greater, longer-term loans.”
Debtors can get started with local-currency loans value as much as $250,000, and the fund plans to lift that to $1 million.
The companions be expecting to lift the backstop capital from philanthropic funders, have an effect on buyers and building finance establishments. The $200 million is subsequently the fund’s mentioned length, whilst the $1 billion determine represents the lending capability it goals to reinforce.
“The longer term can’t be sustainably constructed on one layer of the capital stack,” stated Iyinoluwa Aboyeji, founding spouse of Future Africa, within the observation. “Fairness will have to paintings with debt and long-term securities to offer developers with the capital they wish to construct the long run.”
With out get admission to to loans, startups will have to depend extra closely on fairness financing to extend, giving buyers possession stakes in alternate for capital. However project investment has change into more difficult to safe. Simplest 190 African startups raised $100,000 or extra within the first part of 2026, the lowest number since no less than 2021. Firms not able to borrow both surrender extra possession and keep watch over on the early level or develop slowly.
Debt has change into a bigger a part of African startup financing, even if it stays concentrated amongst a moderately small crew of businesses. Startups at the continent borrowed a record $1.64 billion in 2025, and debt made up 41% of all their investment, up from 17% in 2019. TechCabal Insights tracked every other $614 million in startup debt within the first part of 2026, about 43% of all investment. Over 5 years, 169 African startups introduced debt offers, towards just about 1,900 that raised fairness.
The brand new fund is designed to widen get admission to through letting lenders proportion the danger of lending to companies with income and present buyers prepared to vouch for them. The transfer additionally builds on an previous 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 passed out greater than $5 million, together with a ₦2.5 billion ($1.7 million) debt facility to Agriarche, an agritech startup.
The brand new fund expands that fashion past Cascador’s alumni. Underneath the sooner association, Cascador nominated and assured debtors whilst Sterling equipped the loans. The SME Credit score Backstop Fund may even settle for nominations from different project capital companies and startup studios.
The fund will perform thru Riverwell Platform Maintaining Restricted, a UK-owned corporate, and Riverwell Platform Services and products Nigeria, a Nigerian working corporate. The Nigerian corporate will maintain spouse coordination, borrower evaluation, information assortment, and portfolio tracking. A separate reserve corporate will dangle the backstop capital. Ukachukwu will function a director at the Riverwell platform.
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