Cascador, Sterling Bank Launch $200m SME Credit Backstop Fund

By Adedapo Adesanya

Cascador and Sterling Bank have launched a $200 million Small and Medium-sized Enterprises (SME) Credit Backstop Fund aimed at expanding access to growth capital for Nigerian businesses, with a model designed to support up to $1 billion in outstanding credit capacity.

The fund will provide credit-risk protection to participating finance partners, helping them extend larger, longer-term loans to businesses with proven commercial traction but limited access to debt financing.

The initiative follows the publication of Cascador’s white paper, The Multiplier Model, which examines the financing constraints limiting the growth of African businesses and the need to match capital to companies’ needs and maturity.

According to the report, only 22 per cent of businesses in Sub-Saharan Africa have a bank loan or line of credit, compared with the global average of 36 per cent. This has left businesses in the region relying more heavily on equity financing for investment.

The chief executive of Cascador, Ms Trish Thomas, said the fund would help bridge the financing gap by sharing risks with lenders and enabling businesses to access capital suited to their growth needs.

“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,” Ms Thomas said.

She said the initiative would combine the experience and capital of different stakeholders to create a practical route to debt financing for Nigerian businesses with proven traction, helping them expand and create jobs.

Sterling Bank will contribute its lending infrastructure and credit-market expertise, while Cascador will bring its experience identifying, supporting and investing in businesses with growth potential.

The fund will also bring together SME ecosystem partners, finance providers and backstop capital providers, including philanthropic funders, impact investors and development finance institutions, under a risk-sharing arrangement designed to mobilise additional lending.

Group Executive of Sterling Bank, Mr Obinna Ukachukwu, said the initiative would combine credit protection with a pipeline of businesses recommended by venture funds and studios familiar with their operations and development.

“Alongside the additional protection of the credit backstop, the initiative brings together businesses recommended by participating venture funds and studios that know these enterprises and have supported their development,” he said.

Mr Ukachukwu added that the combination of borrower referrals, structured assessments and ongoing monitoring would give lenders greater confidence to provide larger and longer-term loans.

Under the model, SME ecosystem partners will identify and nominate businesses that meet the fund’s debt-readiness standards. The fund will then apply its eligibility, guarantee and portfolio-risk criteria, using artificial intelligence-powered underwriting and due diligence, before providing an agreed backstop for approved borrowers.

Participating finance partners will independently assess loan applications, make lending decisions and disburse funds. They will also retain responsibility for loan servicing, monitoring and collections.

Eligible SMEs will initially be able to access local currency loans equivalent to $250,000, with repayment terms aligned with their cash flows and subject to lender approval. The fund aims to support individual loans of up to $1 million when fully funded.

The arrangement is intended to reduce the collateral and guarantee burden on businesses seeking growth capital, while providing lenders with structured risk sharing and ecosystem partners with a financing route for companies that have progressed beyond early-stage funding.

The fund will operate through Riverwell Platform Holding Limited, a UK-owned, technology-enabled SME infrastructure platform, and Riverwell Platform Services Nigeria, with reserve capital held separately.

The Nigerian operating company will coordinate partners, assess business readiness, collect data, monitor portfolios and prepare reports, while a separate reserve company will hold and manage the capital backing the credit guarantees.

Mr Ukachukwu will also serve as a director on the Riverwell platform, contributing Sterling Bank’s expertise in financing structures, credit-risk oversight and portfolio monitoring.

The arrangement builds on a Catalytic Fund model piloted over the past two years by Cascador, which acted as nominator and guarantor, and Sterling Bank, which served as lender. The new fund will be independently managed to promote sustainability and financial discipline while allowing participation from multiple ecosystem partners.

Founding Partner of Future Africa, Mr Iyinoluwa Aboyeji, said the initiative would help address the need for businesses to combine equity with debt and longer-term financing as they expand.

“Equity must work with debt and long-term securities to provide builders with the capital they need to build the future,” Aboyeji said, adding that the fund could help Nigerian businesses finance productive assets and create jobs.

Cascador said it had supported 80 ventures since 2019, which had collectively raised more than $150 million in capital. In 2025, the ventures served more than 1.7 million customers and directly employed nearly 4,000 people.