Grosvenor Developments and the Universities Superannuation Scheme will be the first developers to enter into an agreement on their 1,200-home Trumpington Meadows scheme - the first time that the growth fund has been used in this way.
Cambridgeshire Horizons, which manages the area's growth strategy, has agreed the £4.5 million loan. The developers will receive the money for ensuring that new homes come forward at an agreed rate and building community facilities in the first phase of development. Cash will be repaid as homes are sold and made available to fund other developments.
A Cambridgeshire Horizons spokeswoman said: "The growth fund would normally be used for infrastructure but we decided to lend it to the developer, who will take the scheme forward and pay it back further down the line. We wanted to be smarter and make the money work a bit harder for us."
The loan played a key role in securing the developer contribution in a section 106 deal with Cambridgeshire councils. Forty per cent affordable housing will be provided as well as a school and a 60ha country park.