The money will be made available by lenders via the state backed British Business Bank using the Enterprise Finance Guarantee programme.
The government said: “These guarantees can be used to support overdraft borrowing and refinancing of existing debt.”
Business Secretary Greg Clark said: “We want to signal very clearly to small and medium sized businesses who were owed money by Carillion that they will be supported to continue trading.
“The banks have responded to my request by agreeing to support businesses and individuals affected.
“This further guarantee will help those businesses who may not be able to provide the usual security for a loan.
“I will continue to work closely with business organisations, trade unions and banks to actively support those affected by Carillion’s insolvency.”
British Business Bank CEO Keith Morgan said: “The Enterprise Finance Guarantee is an important option for smaller businesses who need access to finance, but may not be able to meet a provider’s normal security requirements.
“To help in these exceptional circumstances, we have designed additional flexibility into EFG that could be particularly suitable for firms in the Carillion supply chain.
“We would encourage lenders to work with their customers to use these new flexibilities to meet their needs.
UK Finance Managing Director, Commercial Finance Stephen Pegge said: “UK banks are working with government to support customers and businesses who have been impacted by the Carillion liquidation.
“The enhancement of the Enterprise Finance Guarantee by the British Business Bank will help those facing temporary cash flow issues to access the finance they need to support their businesses through this period.”
This package is in addition to the more than £200m already announced by Lloyds Banking Group, HSBC and RBS.
For more information on the British Business Bank click here