Glasgow-based WEvolution says the Scottish Government grant will help an additional 150 people develop businesses which support them and their families.
Managing director, Noel Mathias said: "I am grateful to the Scottish Government which has stood by us as we work alongside people trusting they will benefit the community and the country in the long run.
"This funding will help us grow the movement and take it to a lot more people in the regions where we work: Glasgow, Inverclyde, Renfrewshire and Dundee."
The charity brings together groups of donors who make weekly donations to emerging businesses, which can then apply for a small loan to help support growth.
Previous ideas include sewing, photography, woodworking and laundry businesses, while there are also plans to train participants in areas such as bike repair, plastering and electrical wiring.
Scottish Local Government Minister Kevin Stewart said: "I'm delighted to be able to confirm this funding for WEVolution - a fantastic organisation which helps support some of Scotland's communities with the greatest potential to change to follow their dreams and grow their own businesses."
There are hopes high streets across the country will stocking WEvolution products, including keychains and makeup bags, by the end of the year.
WEvolution was inspired by a project in India where women working on rubbish dumps in Mumbai were helped to negotiate waste management contracts.