Jubilant Gainsborough has “punched well above its weight” to win a slice of £33 million to boost its social economy and tackle inequality.
And council leaders hope it could help the town shed its image as “a forgotten place”.
The money has come from Local Access, a funding programme that aims to boost disadvantaged places across the country.
The aim is to build better collaboration between charities, social enterprises and investors, creating a more resilient social economy.
Much of the investment has gone to big cities such as Manchester, Bristol, Bradford and London.
But Gainsborough has won its share too, thanks to a successful bid by the Gainsborough Investment Network, which is a partnership of councils, social organisations and voluntary services.
Coun Giles McNeill, leader of West Lindsey District Council, said: “This is fantastic news. We have punched well above our weight.
“For big cities, a few million pounds is a drop in the ocean. But for forgotten places like Gainsborough, it could a catalyst for lasting, sustainable improvements in the town.”
Eve Fawcett-Moralee, the council’s executive director for economic and commercial growth, was equally excited.
She said: “Our bid made a compelling case for Gainsborough, setting out the real challenges to tackle the multiple causes of deprivation, together with the opportunity to grow the town.
“We are driven to support the town’s social enterprises and to develop a social economy to achieve this.
“Local Access’s endorsement of our approach is a huge boost to our collective confidence.”
Seb Elsworth, chief executive of Local Access, said: “We all know charities and social enterprises do good work for communities. But their power to reshape local economies and tackle inequality is often overlooked.
“We are delighted to work with Gainsborough to help the town realise its potential.”
Cliff Prior, boss of Big Society Capital, which forms part of Local Access, said: “Many areas of the UK have experienced high levels of deprivation for several years. The Local Access pilot programme offers an innovative approach to levelling up the disparity.”