Wolverhampton Councillor Harman Banger, 39, of Bilston Road, appeared at Wolverhampton Magistrates Court on Monday over an alleged offence between March 1 and May 31.
His wife, Neena Kumari, 37, also of Bilston Road, has also been charged with the same offence.
They both pleaded not guilty to a single charge of committing fraud by dishonestly making a false representation to obtain £10,000 under the UK Government Covid-19 Small Business Scheme.
They will stand trial at magistrates court at a later date.
The matter will next be heard for a case management hearing at Dudley Magistrates Court on February 15 at 3pm, where a trial date will be set. Banger and Kumari were told they did not need to attend the February 15 hearing.
Labour councillor Banger, who represents East Park on Wolverhampton Council, stood down from his role as the city’s economy cabinet member after the allegations emerged in June this year.
He was arrested by West Midlands Police in June “on suspicion of fraud offences” and was released pending a full probe.
He has also been administratively suspended from the Labour group in the city pending the outcome of an internal party investigation.