Tracy plans to set aside $1 million so local businesses can more easily get loans, and spend $50,000 on events that will bring people downtown.

The City Council next week is poised to OK a series of steps to guarantee loans to local businesses, or in some cases directly loan them money, as part of an effort to boost the economy.

The city plans to help businesses get lines of credit and business loans for capital, equipment or inventory, and to help merchants buy real estate.

The city plans to guarantee 50 percent of a line of credit up to $50,000 whose term is no longer than one year.

For other business loans, it plans to guarantee 50-percent of loans up to five years, with a limit of $200,000. The first year a business owner might only pay interest on the loan, city administrators suggest.

The third option the council is recommended to OK is help with a down payment on real estate. The city could cover half of a down payment under a loans managed by the Small Business Administration.

Loans will be serviced through local banks like any business loan might be, but the city’s guarantee’s are meant to better the chances of a business getting a loan, said Ursula Luna-Reynosa, head of the economic development department.

To protect itself somewhat, the city wants banks in the event of a default to seize collateral before they go after loan guarantees.

Money to guarantee loans comes from fees paid by developers during the building boom of the last 15 years or so.

With the economy sliding, businesses closing and city revenues falling, officials hope an injection of cash into the local economy will protect Tracy from the worst effects of the biggest economic collapse since the Great Depression.

The city also plans to spend $50,000 on events downtown such as holiday parades and festivals, the Fourth of July celebration, and other entertainment whose aim is to “provide a psychological boost during these tough economic times,” a report prepared for the council reads.