Sydney's first small bar in a CBD laneway will open tonight and could also, if approved, become the first recipient of a cash grant from the Sydney council that is part of a program to encourage more of the laneway businesses.

The program to encourage businesses to open in Sydney's laneways is part of the City of Sydney's Laneways Business Development program that aims to inject life into the laneways in a similiar way to the way Melbourne's laneways have evolved.

Under the program Sydney council will give cash grants of up to $30,000 to small bars, retail and hospitality businesses to encourage them to open in the CBD laneways.

"Enlivening lanes is part of our Sustainable Sydney 2030 vision to create a more vibrant city centre," said Lord Mayor Clover Moore. "The City's laneways hold enormous potential for people with innovative small businesses ideas to work with property owners to identifiy potential laneway spaces and create new attractions for them to draw in residents and visitors."

If approved by Council on December 15 the company behind the new bar, Small Bar Pty Ltd, will become the recipient of one of the grants for its business that will trade into Sussex Lane.

As well as providing matched cash funding the laneways program provide mentoring and training opportunities for new businesses wanting to set up.