The new funding, announced by Chancellor George Osborne in the Autumn Statement, covers 2015-16, doubling the money available through this scheme, which is aimed at supporting the creation of new childcare places.
Osborne said in October that he was considering boosting the Childcare Business Grant scheme as part of a drive to increase female employment.
The grant scheme offers £250 to new childminders and £500 for nursery start-ups or for those providing childcare for disabled children. From 1 September, those launching childminding agencies have also been eligible to apply.
The deadline for applications for the initial fund of £2m is 31 December 2014. The Government said recently that £1m has been allocated so far to 4.500 entrepreneurs, which it claimed had supported 29,000 new childcare places.
Extending the scheme for another year would support a further 50,000 places, the Treasury said in October.
Take-up of the funding has been relatively slow, however, and there has been criticism from some in the early years sector that the amounts awarded are too small to give significant help.
Neil Leitch, chief executive of the Pre-school Learning Alliance, said, 'While we welcome any additional investment into early years, the extension of the Childcare Business Grant scheme announced today is unlikely to have a significant impact on the sector.
'The fact that the government believes that the grants on offer are enough to support the start-up of a new childcare business suggests a very limited understanding of the costs associated with running this kind of provision. Given that they are still set at such low levels, they are unlikely to provide any real financial support for childcare businesses faced with rising rents, utilities, insurance, staff, training and resource costs, as demonstrated by the low take-up of the existing scheme.
'If the government wants to ensure the sustainability of new and existing childcare businesses, it would do better to direct additional investment into the chronically- underfunded free entitlement scheme. As our recently-commissioned research on the initiative showed, government funding currently only covers four out of every five childcare places, with providers forced to make up the shortfall. This is clearly not a sustainable position, and in the long term, is likely to impact on childcare affordability – as childcare providers are forced to push up their fee levels – and availability, as more and more providers opt out of the free entitlement scheme in a bid to stay afloat.
'It is crucial, therefore, that the government addresses this issue as a matter of priority if its aim of affordable, accessible and quality childcare is to be achieved.'