It's for people who are on a low household income or, like me, receive higher amount of child tax credit than the family element (I receive a higher amount as DS1 receives DLA). Also if you receive working tax credit and are disabled.
I am applying for the £500 grant, have been told that I needed to have claimed more than the family element in child tax credit for the past year, which I have done as ds was under 1 for mot of it. However, you can claim up to 3 moonths after baby is born so you might qualify then if not now. Also if you are on Job seekers or income support. Collect a form at your local jobcentre plus