City signed Nypan from Norwegian side Rosenborg last month, with director of football Hugo Viana hugely complimentary of the 18-year-old midfielder, who the Premier League club had been "monitoring for quite some time".
Viana said: “We feel that he already has numerous standout qualities but that at only 18 years of age, he is only going to continue to improve.
“We believe he will be an important asset for Manchester City in the years to come and we will support him every step of the way in his development.”
Boro also scouted Nypan last season but, given the high profile interest from the Premier League and major European clubs, realised it wasn't going to be possible to sign the midfielder.
However, when it emerged Nypan was going to City, Boro took advantage of their healthy relationship with the Premier League club and enquired about a loan move. And City felt it was the ideal next step for Nypan.
It's understood the deal isn't done as things stand, but is extremely close, with Boro hoping to put the finishing touches to the signing on Friday.
Nypan is predominantly a central midfielder, but is versatile and can also as an attacking midfielder, on the flanks and even up-front.
Despite only being 18, Nypan played 70 times for Rosenborg, scoring 14 goals and providing 11 assists, and has played for Norway from Under-15s up to Under-21s.
Reports also emerged on Thursday night claiming Boro were in advanced discussions to sign Metz forward Cheikh Sabaly.
It's understood that Boro did make what they believe was a strong offer for the 26-year-old, but it was rejected by Metz.
Boro are unwilling to go higher than what they've already offered - which was their valuation of the attacker - so unless Metz soften their stance, the Senegal international is unlikely to end up at the Riverside.