The Birmingham City Council has approved the first part of funding for a small business loan program designed to help small businesses struggling with the impact of COVID-19.

The program, which was approved in concept last week, would provide eligible small businesses with up to $25,000 in interest-free, 180-day loans. Josh Carpenter, the city’s director of innovation and economic opportunity, said the loan would “stabilize small businesses that are struggling (and) bridge small businesses into either a more stable economic cycle or other sources of capital such as (Small Business Administration assistance).”

Tuesday’s vote put $200,000 into the fund. That money comes from the budget of Carpenter’s office. A vote to allocate $1 million from the city’s general fund will happen Wednesday.

Carpenter and Mayor Randall Woodfin told councilors last week that they anticipated being able to raise matching funds from the private sector to bring the loan fund total to $2.4 million. On Tuesday, they said they were on their way to reaching that goal.

“We have $900,000 already committed to match the city’s $1.2 million, and we have several other outstanding asks that we expect will result in more funding,” Carpenter said.

Revenue-generating Birmingham businesses with fewer than 50 employees will be eligible for the loan. Woodfin said he was not considering a tax abatement for those businesses because that would “pretty much offset what we’re trying to do” with the loan program.

“In a very capitalistic way, we need to be cognizant about our revenues,” added District 2 Councilor Hunter Williams.

Wednesday’s council meeting also will include more discussion of the makeup of the loan advisory committee, which will determine which small businesses get city assistance. As currently proposed, that committee will be made up of representatives from the Department of Innovation and Opportunity, the Birmingham Business Resource Center, the Community Foundation of Greater Birmingham and private sector partners who donate to the fund.