The money will support Credit Unions and Community Development Financial Institutions (CDFIs) which offer financial help to those who have poor credit and are often turned away from high street banks.

Communities secretary Aileen Campbell said: “We know the pandemic has had a financial impact on many people in Scotland and we want to strengthen services that support people with managing their money.

“Credit unions and CDFIs provide ways of saving, lending, and accessing affordable credit. They can be a financial lifeline for people who can’t always access what they need from high street banks, helping them to avoid riskier ways of dealing with debt, like going to pay day loan companies.”

The funding will support work which promotes the availability of affordable credit and strengthens the balance sheet of affordable credit providers

Organisations are being invited to submit applications by 3 March 2021, and they will be informed of funding decisions during the week commencing 8 March.

Successful applicants will receive funding by 31 March.