To be eligible for the grant, a business must have been required to close due to local COVID-19 restrictions. The largest businesses will receive £1,500 every three weeks they are required to close. Smaller businesses will receive £1,000.
Payments are triggered by a national decision to close businesses in a high incidence area.
Chief Secretary to the Treasury Steve Barclay, said: "These grants provide businesses with a safety net as they temporarily close their doors to help save lives in their local areas.
"As local economies eventually and carefully re-open after local interventions, our Plan for Jobs is there waiting to help businesses get back on their feet, protect jobs and thrive in the future."
Business Secretary Alok Sharma, added: "No business should be punished for doing the right thing, which is why today’s package will offer additional breathing space for businesses that have had to temporarily close to control the virus.
"Through our wider Plan for Jobs, we will continue to back our innovators and job creators across the country who are playing a critical role as we build back better from the pandemic."
Speaking in the House of Commons, Barclay also reiterated the recent commitment to roll-out additional payments for people on low incomes who are required to self-isolate in areas with high levels of COVID-19.
Other measures announced to protect, support and create jobs include the Eat Out to Help Out scheme, cutting VAT for tourism and hospitality by 15%, a £2 billion Kickstart Scheme, which has opened for applications, and an £8.8 billion investment in new infrastructure, decarbonisation and maintenance projects.
Any businesses still closed at a national level, including nightclubs, theatres and event companies, will not be eligible.
