City council may not go ahead with a proposed grant program for small businesses, after a committee voted against it on Tuesday.

The program, which would have seen grants between $750 and $4,000 go to businesses with under 20 employees that apply for it, was struck down 5-2. Next, the proposal will go before council, which will have the final say.

Begrudging support from mayor

"For me, begrudgingly, I'd say it's worth trying," said Calgary Mayor Naheed Nenshi, who along with Coun. Druh Farrell was on the defeated side of the proposal.

The $70.9-million program was brought forward as a suggestion to support business hardest hit by the economic downturn and property tax shift.

It was meant to replace the oft-criticized phased tax program (PTP), but during debate councillors suggested that even though it would go to business owners and not just property owners, it may be an equally imperfect tool.

City administration had recommended committee approve the proposal, but said it had received negative responses from some in the business community including Calgary's Chamber of Commerce.

"Certainly no one is jumping up and down for it," said Nenshi, adding he had heard business improvement areas were cautiously supportive of the plan but wanted to see more concrete numbers first.

I know that math is hard but I'm pretty sure that $750, or $4,000, is less than $5,000. -Coun. Jyoti Gondek

Coun. Jyoti Gondek, one of the more outspoken opponents of the proposal, referred to the administration's material and said she couldn't have written "a more damning report" about it if she'd tried.

"There's no way that we support this just because there's not something better before us. We build something better," she said.

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 non-residential properties a $5,000 rebate on average — which would be insufficient.

"I know that math is hard but I'm pretty sure that $750, or $4,000, is less than $5,000," she said.

The two-year program could support between 20,000 and 50,000 businesses, and would cost $1.5 million to administer.

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

For Coun. Evan Woolley, the largest issue was the grants don't have the support of the business community.

"If my property taxes went up $20,000 and I received $750, how do you think I would feel about that as a business owner?" he said.

Nenshi said while the program wasn't perfect, he thought it could have made a difference.

"If you are the pizza shop on the corner and you get a grant for $1,000 it may not sound like much, but that $1,000 can allow you to do a flyer and coupon campaign and increase your revenue by $5,000 or $10,000," he said.