Whangarei District Council is to lend the Northland Rugby Union $300,000 to keep it afloat in the Air New Zealand Cup.
The loan decision was made on Wednesday.
The union needs $700,000 to cover the cost of playing in the Air New Zealand Cup next season.
It has raised $200,000 in a public appeal and plans to raise another $100,000 by issuing debentures.
One councillor questioned the ability of the Northland Rugby Union to repay the council loan.
Mayor Stan Semenoff says a condition of the lending is that the council will take back the lease and control of Okara Park which the union currently has at a peppercorn rental.
The council says the economic benefits of keeping Northland rugby in the top tier are worth about $7 million per year to Whangarei.