The loan will help ease the financial impact of the coronavirus pandemic, according to the Department for Digital, Culture, Media and Sport.
The money will be lent to the Levy Board due to its role in providing central funding of industry costs of race-day regulation, equine welfare and industry training.
"The funding will ensure essential race-day integrity costs and related health and safety expenditure are safeguarded, enabling the Levy Board to continue their programme of financial support and funding into the industry which has suffered considerably as a result of Covid-19," the DCMS said.
British Horseracing Authority chief executive Julie Harrington said: "This money will help ensure racing continues behind closed doors despite the absence of spectator revenues. This will benefit our racecourses, our participants and their communities, and the vital role racing plays as an employer and contributor to the rural economy."
David Armstrong, chief executive of the Racecourse Association, added: "Racecourses have suffered lost turnover of over £325m since the pandemic began and this funding will provide a crucial bridge for both racecourses and horsemen as we begin the long road to recovery."