What is it called when the government takes a "hands off" approach to businesses?

Laissez faire, pretty sure it's what you're referring to. Laissez faire (a Frencheconomic term) is when a government allows a business to do whatever it wants to, and does not make a government intervention, which might potentially cause a market failure (when subsidies, tariffs or tax goes wrong and cause externalities). For example, if a product is just bad, it's neither a merit (beneficial) or demerit good to society, the government will just remain indifferent to it, hoping it will be removed from the market as nobody wants it.