Businesses that have been forced to close temporarily due to Government restrictions will be eligible to receive up to €5,000 per week.
Meanwhile, VAT for restaurants and the hospitality sector, which was controversially hiked last year, will be cut from 13.5% to 9% from November 1 until the end of 2021.
The new scheme for businesses aims to provide support for those forced to temporarily shut during the pandemic as a result of restrictions.
This primarily affects the entertainment sector, and included bars and restaurants.
Government will make payment based on a businesses' average 2019 weekly turnover, up to a maximum of €5,000.
He also said that the Government had applied for EU funding towards wage subsidy scheme.
This could result in Ireland accessing around €2billion to help employers.
The scheme will continue passed its March 21 deadline, with the Minister stating "there will be no cliff edge to this vital scheme."
Minister Donohoe explained that this Budget was based on Covid-19 being around for the next year without a vaccine, and under the assumption that Britain would have no trade deal with the European Union.
He said that they forecast the loss of 330,000 jobs this year, with roughly half of those finding employment again in 2021.
Mr Donohoe believes we will not see the positive economy of 2019 again until at least 2022.
"Every week and every month will be a step towards a future much better than what seems possible today", he said.
He added: "This package is unprecedented in both size and scale in the history of the state."
Mr Donohoe also announced a recovery fund of €3.4billion to help reboot the economy.
He said there is a “high level of uncertainty” over the scale of the deficit for this year as new restrictions could come in, forecasting a deficit of €20.5bn.
As part of his opening statement, he said this Budget was "a bridge" to a better future.
He explained: "Our message is clear, yes the test we face is daunting. Further demanding choices await. Yes, the uncertainty is and anxiety about the future of lives and the future of livelihoods is great.
"And yes, we will prevail. We will come through this. And from the ashes of the pandemic together, we will build a stronger and more resilient Ireland.
"Budget 2021 is a bridge to that future."
