Cascador and Sterling Bank have announced a partnership to provide Nigerian startups and small businesses with access to $1 billion in loans. The initiative involves a $200 million credit backstop fund that will cover potential lender losses, encouraging banks to lend to businesses lacking conventional collateral. This fund is expected to offer founders an alternative to selling equity to finance growth. The partners plan to raise the backstop capital from impact investors, philanthropic organisations, and development finance institutions.
The loans will initially be capped at $250,000 in local currency, with plans to increase the maximum to $1 million. To be eligible, startups must be nominated by venture capital firms or startup studios and undergo an artificial intelligence-based assessment of their readiness for debt financing. Sterling Bank will retain control of credit approval, disbursement, and collections. This approach aims to mitigate risks associated with lending to startups.
The initiative addresses the challenges faced by African startups in securing equity funding and the growing need for alternative financing options. According to the 2025 World Bank Enterprise Survey, only 20% of businesses in Nigeria used a bank loan or credit line, compared to 36% globally. This disparity highlights the need for innovative financing solutions to support business growth in Nigeria.
The new facility builds on a $2 million pilot launched by Cascador and Sterling Bank in 2025, which provided loans to companies within Cascador’s network. The pilot included a $1.7 million debt facility for agritech startup Agriarche in June 2026. Unlike the pilot, the new fund will accept referrals from external venture capital firms, potentially extending access to debt financing beyond Cascador’s alumni.
Riverwell Platform Services Nigeria will manage borrower assessments and portfolio monitoring, while Sterling Bank remains responsible for lending operations. This division of responsibilities aims to leverage the strengths of both parties in managing the loan process. The model seeks to use private and development capital to reduce banks’ exposure to startup lending.
The partnership between Cascador and Sterling Bank comes at a critical time for African startups facing a tighter equity funding environment. By providing an alternative financing option, the initiative aims to support the growth of startups and small businesses in Nigeria. The use of a credit backstop fund is expected to encourage banks to lend to businesses that might not have otherwise qualified for conventional credit.
The success of this initiative could have significant implications for the Nigerian startup ecosystem, providing a new financing avenue for businesses. With the right implementation and management, the $200 million credit backstop fund could unlock $1 billion in loans, supporting the growth and development of startups and small businesses in the country.
Key points
- The partnership aims to unlock $1 billion in loans for Nigerian startups and small businesses.
- The initiative involves a $200 million credit backstop fund to cover potential lender losses.
- The loans will initially be capped at $250,000 in local currency, with plans to increase the maximum to $1 million.
