Boro currently have 563 covered places at the Flamingo Land Stadium in a total capacity of 2,070.
The expansion will push this up to 1,745 under cover in a capacity of around 2,800 which will include the ability to segregate matches when required.
A second stage is planned in the future to include a covered terrace at the swimming pool end, toilets for away supporters and a kiosk.
This will prepare Boro for life in the upper echelons of non-league football, should their on-field progression continue.
Chairman Trevor Bull said: “The drive behind all this is improving the facilities for our supporters.
“At this present moment, because we are not able to give enough seats and enough cover, potentially our income could be halved by inclement weather.
“We know from our figures last year, when the weather is bad, it can take 400 people off the gate.
“If we want to maintain our push for where we want to get this club to be, we need to maintain our average crowds.
“We just want people to come down and have a great time.
“We’ve had requests about children and families, so we are creating a family section in the new stand.
“We’re delighted that the supporters club have decided to join the bid and they are going to provide the funds that will enable us to increase the number of disabled places in the ground from four to 12.
“The fact that they are rebranding and have a clarity of purpose is great.”
Bull has been quick to praise the droves of fans, who have come through the gates to help Boro both on and off the pitch.
“We have only been able to do this because of the number of supporters coming to games,” he added.
“They have created the need through looking at our current attendances.
“Last season we said that if fans come to games then we’ll build a better team - we did that.
“This year we are saying that if they continue coming then we’ll build a better stadium.
“Not only that, but we’ll be doing it in a sustainable way.
“Hopefully, at this time next season, we’ll have a brand new state of the art stand, but with no debt. How many clubs can say that?
“We currently have an appeal out there because we have paid a few bills up front and we don’t want the stand to affect anything that happens on the pitch.
“The Crowdfunding appeal will run until the end of November, but after that we will keep things going until the end of the season because we have a number of other events planned.
“If everything goes to plan then it will only take around 12 weeks to erect the new stand, but that won’t affect our on-the-field ambitions for this season.
“If we are to be promoted this season then we are given 12 months to reach the attendance that we need.
“So us not having a 3,000 capacity stadium in April won’t affect us if we are promoted or involved in the play-offs.”
The Boro chairman has also moved to thank both Scarborough Borough Council and Everyone Active, who have both helped Boro into their current position.
He added: “The great thing is the co-operation with Scarborough Borough Council and Everyone Active, who have given us the project expertise to construct the new stand.
“They are very much behind what we are doing, which is fantastic.”