A proposal to redevelop a marina has been boosted by a £1.5m loan from West Somerset Council.
The Onion Collective project will see a two-storey gallery, restaurant, workshops and self-catering units at East Quay in Watchet.
The group said the loan may help secure a £5m grant from the government's Coastal Community Fund (CCF).
Director Georgie Grant said she hoped the CCF "see the extraordinary potential in this project".
"We are delighted that the council are supporting the East Quay project with the facility of the loan," she said.
"It is a clear demonstration of our joint desire to build a vibrant and community-led future for our town."
About 200 jobs are expected to be created by the scheme, which the Onion Collective said would attract 100,000 more visitors to Watchet, thanks to the gallery space for events and a paper mill that will show paper being made by hand.
Leader of West Somerset Council Anthony Trollope-Bellew said: "We anticipate this project to act as a catalyst for the economic recovery of the whole area and believe it to be a truly transformative regeneration project."
Planning permission was approved in June and the authority has since approved a lease on part of the land.