A Calgary city councillor says she's frustrated the city plans to push ahead with spending millions on a grant program she says won't help small business owners.

Council's priorities and finance committee is set to discuss the details of a grant program on Tuesday that would see the city take $70.9 million from its rainy day fund to spend on grants for small businesses.

A report prepared by the city's chief financial officer says a program with a minimum grant of $750 and a maximum grant of $4,000 would yield an average grant of $1,750 for an estimated 20,000 businesses. As many as 50,000 businesses could be eligible, the city said.

Coun. Jyoti Gondek said she's heard from small business owners who told her "this is not what we want."

Gondek had earlier proposed shifting some of the city's property tax burden from businesses to residential accounts, and giving rebates to homeowners.

She said she was told at the time her proposal would only give businesses a $5,000 rebate — which would be insufficient.

"When my proposal came forward, I seem to remember the chair saying $5,000 is peanuts. That's not going to help anybody, but a $750 grant is going to help somebody? This is rich. And if you read the report, no one in the business community is supportive of this grant program," she said.

"It's also going to cost administration money to deliver on it. Why on earth would we do it?"

But Mayor Naheed Nenshi said he believes the program has the potential to make a difference, and that the amount of red tape involved has been overstated.

"You know, a lot of people are going on about the administrative cost and complexity. There's a questionnaire that's one page long with seven questions. It's not going to take much to apply," he said.

"And so what's important to remember is that the other idea that council rejected was an across-the-board tax rebate, which we've done the last two years and found not that effective."

A sharp decline in taxes coming from increased vacancies in the downtown core has hit the city hard in recent years. It was a big shift for a city that largely relied on that downtown tax income.

For the past two years, the city has used rebates to limit tax hikes for business property owners, but this year it opted for the grant program to specifically target small businesses instead.

Approximately 95 per cent of businesses in the city are small businesses, according to Statistics Canada.

Businesses will be able to apply for the grants online if council approves the plan. The current iteration says only businesses with fewer than 20 employees will be eligible.

It will cost more than $1 million to run the two-year program, with additional funding being required if the program is extended.