The Council will use the loan facility to lend funds to East Lothian Housing Association (ELHA), which will develop more sites for low cost homes.
The loan facility will be available for projects that have which have been agreed between the Scottish Government, the Council and ELHA, and where the Government grant is available for that project.
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ELHA will be free to decide on when, or if, to call on that facility, subject to the housing development being agreed.
Housing and Communities Minister Alex Neil said: "In the long run, this funding will allow more affordable homes to be built in East Lothian.
"This Government is keen to help local authorities, when appropriate, to look at new or innovative ways of funding the provision of affordable housing.
"We are determined to boost Scotland's stock of good quality affordable housing while helping to safeguard jobs and provide new employment opportunities."
(GK/BMcC)
