The grants will fund unavoidable business costs like utilities, overheads, legal costs and financial advice.
NSW Treasurer Dominic Perrottet said local cafes, restaurants, corner shops, gyms and small accommodation providers would all be able to apply.
Eligible businesses will need to have between one and 19 employees, a turnover of more than $75,000 and a payroll below the payroll tax threshold of $900,000.
Applications will be available through Service NSW within a fortnight and remain open until June 1, 2020.
The announcement comes as NSW reported its 11th victim of coronavirus: a 74-year-old woman who died in Albury after contracting the virus overseas.
There were 91 new cases of coronavirus overnight, bringing the state’s total to 2389.
NSW Chief Health Officer Kerry Chant said 42 people are in ICU and 22 are being ventilated.
NSW Premier Gladys Berejiklian said in a press conference this morning that residents should expect to be isolating and undergoing social distancing measures “for at least six months”.
Berejiklian said while the cases across the state have “stabilised”, there are still serious concerns about community-to-community transmission.
“What concerns us greatly is the number of cases being acquired without us knowing the source,” she said.
“That is something we have to keep mindful of and something that our health experts are most worried about here in NSW.”
During the press conference, NSW Police Commissioner Mick Fuller said 3700 people are in hotels in NSW in quarantine after flying back to Australia and another 400 are expected to arrive today.
Fuller added that the stand-off between NSW and cruise ship companies seems to have come to an end, as two Carnival ships departed overnight and five Royal Caribbean ships will depart after refuelling and restocking on the weekend to head back to their port of origin.
“A wonderful outcome for all,” he said.
There are still six cruise ships off the coast of NSW and 19 across Australia.
