According to media company Bloomberg, the loan, which is equivalent to $2.7 billion, will be used to fund the early stages of the project. Neom declined to comment on the news.
Set to be developed in the northwest of Saudi Arabia, Neom will occupy an area of 10,200 square miles and consist of 10 project including a 170-mile-long city. Alongside the city, named The Line, three regions have been announced – port city Oxagon, ski rest Trojena and island resort Sindalah.
Construction is already underway on The Line, which was the subject of a recent documentary.
Loan "could be completed in the next few months"
The news of the loan follows reports to Bloomberg from "people familiar with the matter", it said. These informants, who remain anonymous, added that the loan will be largely provided by local lenders.
"Banks are negotiating terms with Neom and, if agreed, the loan could be completed in the next few months," Bloomberg reported.
Bloomberg added that alongside the loan of 10 billion riyals, Neom is also seeking a further three billion riyals ($800 million) from local banks for the development of Shushah Island.
Luxury destination Shushah Island will be part of the island Sindalah resort and will reportedly contain "the world's largest coral garden".
Search follows previous investments in Neom
Neom is an initiative of Saudi Arabia's crown prince Mohammed bin Salman and forms part of the Saudi Vision 2030 plan to diversify the country's economy to reduce its dependence on oil. It is reportedly being largely bankrolled by the country's Public Investment Fund, which invests funds on behalf of the government.
The search for the latest loan follows previous hefty investments in the project, Bloomberg reported. This includes one worth more than 21 billion riyals from a group of local investors for the development of temporary housing and facilities for 95,000 people.
Meanwhile, a Riyad Bank has provided a loan of three billion riyals for Sindalah, which is being designed by Italian studio Luca Dini Design and Architecture.
The controversial project, which is one of the largest in the world, has been criticised for sustainability, liveability and human rights reasons.
Last year human rights organisation ALQST reported that three people have been sentenced to death after being evicted from the Neom site. Experts from the UN Human Rights Council recently expressed "alarm" over the imminent executions.
Amnesty International's Peter Frankental told Dezeen that companies working on Neom should "think twice" about their involvement in the project.