New facility targets growth-stage businesses with potential to unlock up to $1 billion in lending capacity
LAGOS, Nigeria, October 21, 2026 — Growth-stage enterprise platform Cascador and Sterling Bank have announced a $200 million SME Credit Backstop Fund designed to help Nigerian small and medium-sized enterprises (SMEs) access larger, longer-term loans by reducing the lending risks faced by financial institutions.
The initiative aims to support up to $1 billion in outstanding credit capacity through a structured risk-sharing mechanism that provides participating lenders with a defined level of protection against losses on approved loans. Rather than lending directly to businesses, the fund will act as a credit backstop, encouraging financial institutions to extend financing to commercially viable enterprises that might otherwise struggle to meet conventional lending requirements.
Announced on October 14, the initiative addresses a longstanding challenge for Nigerian entrepreneurs: access to appropriately structured growth capital. Businesses with established products, paying customers and expansion opportunities often struggle to secure bank financing because of collateral requirements, limited credit histories or lenders’ perceptions of risk.
According to Cascador’s The Multiplier Model white paper, only 22 per cent of businesses in Sub-Saharan Africa hold a bank loan or line of credit, compared with a global average of 36 per cent. The disparity highlights the difficulty many businesses face in accessing debt to finance expansion, acquire productive assets and strengthen their operations.
A risk-sharing approach to business growth
Under the proposed model, participating venture capital firms, startup studios and other SME ecosystem organisations will identify and nominate businesses that meet the fund’s debt-readiness criteria. The platform will use AI-powered underwriting and due diligence to assess applicants, alongside eligibility, guarantee and portfolio-risk standards.
Participating finance partners will conduct their own credit assessments and retain responsibility for approving and disbursing loans, servicing facilities, monitoring borrowers and collecting repayments. The backstop is intended to reduce lenders’ exposure to potential losses, not eliminate their credit risk or replace their lending decisions.
The initial financing pathway is designed to provide eligible businesses with local-currency loans equivalent to as much as $250,000. Once fully funded, the initiative aims to facilitate loans of up to $1 million per business, with repayment periods aligned more closely with borrowers’ cash flows and investment requirements, subject to lender approval.
The partners also intend to ease the collateral and guarantee burden for qualifying enterprises, potentially making debt a more accessible source of capital for businesses that have demonstrated commercial traction but need additional resources to scale.
“Nigeria 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, Chief Executive Officer of Cascador.
She said the initiative seeks to create a practical route to debt for businesses with proven traction by sharing risk with lenders and drawing on the knowledge of organisations that have worked closely with the entrepreneurs.
Broadening the SME financing ecosystem
The fund builds on a Catalytic Fund model piloted by Cascador and Sterling Bank over the past two years. The new platform is intended to extend participation beyond Cascador’s own business network, bringing together lenders, business-support organisations, investors and providers of risk capital.
Potential backstop capital providers include philanthropic funders, impact investors and development finance institutions. Their participation is expected to help establish the reserve capital that supports the credit-risk-sharing arrangement and mobilises additional lending.
Obinna Ukachukwu, Group Executive at Sterling Bank, said the combination of a credit backstop and referrals from venture funds and studios familiar with the businesses could strengthen lenders’ confidence in extending larger, longer-term facilities.
The model, he said, combines a stronger pipeline of prospective borrowers with structured assessment and ongoing monitoring, while preserving the bank’s responsibility for its lending decisions.
The initiative comes amid wider debate about the balance between equity and debt in financing African businesses. Equity investment can provide capital without scheduled loan repayments, but it usually involves giving investors an ownership stake. Debt, by contrast, allows founders to finance expansion without necessarily diluting their ownership, although it creates repayment obligations that businesses must be able to meet.
For companies with predictable revenues and viable expansion plans, appropriately structured debt can help fund equipment, inventory, distribution, technology and working capital. The challenge is ensuring that loan size, pricing and repayment schedules reflect the business’s ability to generate cash.
Building on an established enterprise pipeline
Cascador says it has supported 80 ventures since 2019, with participating businesses collectively raising more than $150 million in capital. In 2025, the organisation’s alumni served more than 1.7 million customers and directly employed nearly 4,000 people, according to the company.
The new facility will operate through Riverwell Platform Holding Limited, a UK-owned technology-enabled SME infrastructure platform, and Riverwell Platform Services Nigeria. The Nigerian operating company will coordinate partners, support business readiness and assessment, collect data, and oversee portfolio monitoring and reporting. Reserve capital will be held separately to support the backstop arrangement.
Future Africa founding partner Iyinoluwa Aboyeji welcomed the initiative as a way to complement early-stage investment with additional financing options as companies mature. He argued that sustainable business growth requires different forms of capital to work together, enabling entrepreneurs to finance productive assets, expand operations and create jobs.
Execution will determine the impact
While the proposed $200 million backstop could support a significantly larger volume of lending, its eventual impact will depend on capital mobilisation, lender participation, borrower eligibility, loan pricing and repayment performance.
The stated $1 billion lending capacity is a target for the credit supported by the facility, not a claim that $1 billion has already been disbursed to SMEs. The initiative’s ability to attract backstop capital and translate risk-sharing commitments into approved, affordable loans will therefore be central to its success.
For Nigerian SMEs, the key test will be whether the model delivers financing on commercially workable terms to businesses that need capital to expand but remain underserved by conventional banking. For the wider economy, the opportunity lies in developing a more diversified financing system in which equity, debt and other forms of patient capital support enterprises at different stages of growth.
Editorial note: The $200 million figure refers to the announced credit backstop, while the $1 billion figure is the lending capacity the initiative aims to support. Neither should be presented as money already disbursed to businesses.