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|Ross Brawn had warned of 'tragedy' if F1 lost teams AFP/CLIVE MASON|
With the 2020 season yet to get underway and with 10 of the scheduled 22 races already either cancelled or postponed, the 10 teams hammered out the new agreement.
The BBC reported that the teams voted to lower the budget cap to be introduced in 2021 by US$30 million to US$145 million.
This will be reduced again to US$140 million in 2022 and US$135 million for the period 2023-25.
Other measures were also agreed, said the report, including a research-and-development handicap system.
Friday's agreement still needs to be officially approved by the world motorsport council of governing body the FIA next week.
Initially, a spending cap of US$175 million was set to be introduced next year in a bid to help even up the competition.
But that was before international sport was halted by the global pandemic.
Earlier this month, F1's managing director Ross Brawn had warned of a "tragedy" if teams were forced out of business.
"It has become very clear, from talking to the management of the teams. The message is clear. We've got to cut costs and have a reduction of the cost cap ... If we lose some teams in this period it would be a tragedy," he said.
"There is going to be a much more equitable prize fund in the new agreement. The midfield teams in particular are going to be much better off in terms of their proportion of the prize money.
"So a good midfield team should be able to score podiums, maybe a win, and should be able to show a small profit. If we can achieve that we should have a very sustainable future."