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The proposal still requires the signature of Mayor Antonio Villaraigosa.
CIM Group, which owns the Hollywood and Highland complex including the Kodak Theater, intends to spend the money to build a rehearsal center and a sub-stage below the existing stage.
It is expected the world-famous circus will begin its performance in Hollywood in 2011.
City officials estimated that Cirque du Soleil shows at the Kodak Theater could bring 1.2 million visitors to Los Angeles every year, many of them tourists. The circus plans to base the shows on the history of movies.
The 30-million-dollar loan will be funded with federal money set aside for economic development purposes under a Department of Housing and Urban Development program, officials said.
City Council President Eric Garcetti, whose district includes Hollywood, said he was confident the loan will be repaid in full since the show would only need to sell 60 to 65 percent of tickets every night to break even.
Cirque du Soleil shows in Las Vegas routinely sell at least 85 percent of their tickets, according to Garcetti.