Businesses in England that are forced to shut because of local Covid-19 lockdowns will be able to claim up to £500 a week in government grants, under new measures announced by the Treasury.

Firms will be able to claim £1,500 for each three-week period they have to remain closed as a result of geographically targeted measures. The support comes as concerns grow about a fresh wave of business failures.

Smaller firms that pay less in business rates will receive a lower payment of £1,000 every three weeks, under the plan announced on Wednesday by Stephen Barclay, the chief secretary to the Treasury.

Payments will be triggered by a decision to close businesses in areas affected by a high incidence of coronavirus cases. Each grant will be made for a three-week lockdown period, with each new three-week lockdown period triggering an additional sum.

Ministers said the money would supplement the “plan for jobs” announced by Rishi Sunak, the chancellor, in his July mini-budget. This included a £1,000-per-worker bonus for retaining staff who were previously furloughed, subsidised work for the under-25s and additional employment support at jobcentres.

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 reopen 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.”

The Treasury said no specific amount had been earmarked for the latest support scheme, with the sums involved dependent on the number of local lockdowns and their duration.

Businesses still closed as a result of national lockdown restrictions – such as nightclubs – will not be eligible for the grants.

The Treasury said local authorities would also receive an additional 5% top-up amount of business support funding to enable them to help other firms that may not be on the business rates list but have been affected.

Alok Sharma, the business secretary, said: “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.”

Mike Cherry, the national chairman of the Federation of Small Businesses, said: “Though a lot of firms have now been able to reopen, thousands are still impacted by local lockdowns and sector-based restrictions.

“That’s why this intervention is so critical – throwing a much needed additional financial lifeline to those most harmed.”

Annie Gascoyne, the director of economic policy at the Confederation of British Industry, said: “New direct cash grants will certainly help small businesses if their area falls under new restrictions to protect public health.

“But the impact of Covid-19 is still hurting businesses, so the government will need to look at more targeted support in the autumn. That needs to include a successor to the furlough scheme and allowing businesses to defer VAT payments from July to September.”