Croydon LBC believes a scheme offering loans to social enterprises in the borough will boost its economy and create new bidders for council services.
The government-backed Social Enterprise Assist scheme aims to connect large companies with growing co-operatives in the region.
Social enterprises can apply for interest-free loans of up to £30,000 as well as mentoring and access to experts.
Vidhi Mohan (Con) said Croydon wanted to encourage a wide range of businesses to the area.
“The success of Croydon will come from improving the economy,” he said. “Social enterprises are an important part of that.
“They bring out entrepreneurial spirit and strengthen communities.”
He added that helping co-operatives get into a position to bid for contracts from the local authority would be a bonus.
“In the long run if more are in a position to bid for council services then great.”
Funding for the scheme has already been secured from insurance firm Legal & General, the Charities Aid Foundation, and the Coast2Capital local enterprise partnership. The application process runs from 10 March to 10 April.
Amy Clarke, head of advisory at the Charities Aid Foundation, said: “Social enterprises can make a huge difference to people in the community.
“There is a great spirit of innovation visible at the moment, but forward-thinking entrepreneurs are struggling to find the funding and the support they need to enable them to get their ideas off the ground.”