Companies will have to prove that their plans will boost innovation or support research and infrastructure to get money from the fund.
All applications will be scrutinised by departments and a special board before going to Economic Development Minister Alan Maclean.
The initial plans were for a £10 million fund that would be replenished over time with loan repayments, but the proposals going to the States call for a £5 million pot to start with.
Treasury Minister Philip Ozouf, who has to take the proposition to the States to set up the fund under the Public Finances Law, said that the fund could support innovation and spark economic growth.
