The city plans to participate in the online crowdfunding program offered by Kiva and designed to provide small loans to entrepreneurs.
The loans - that often come from individual citizens - are for up to $10,000, James McKissick of city Multicultural Affairs said.
He said the city needed to come up with $213,000 to launch the program. He said the city is asked to put up $43,000 and local foundations will provide the rest.
There will be a local Kiva director who will work with local firms to encourage them to make applications.
The loans are no interest, and it is the responsibility of the entrepreneur to repay them.
The city will work through the Co-Lab to have Chattanooga as a Kiva City.
Mr. McKissick said the city of Louisville was able to raise $600,000 in loans for small firms through the online program.