An official with a government trade body casually mentioned this week that the days of business grants and cheap government loans were numbered.

He said that several entities which award grants in particular could no longer tolerate the abuse of such facilities. It would be unfortunate if that were to happen because it could also end up depriving deserving recipients of these facilities.

One cannot blame the government either as there have been many sorry tales told of the misuse of these grants and low-interest government loans, which were essentially set up to help budding entrepreneurs start or expand their business. Some of the stories are simply outrageous, highlighting applicants' complete disregard of what the facilities were designed for in the first place.

An official with a state-owned entity that disburses low-interest funds once related that a RM3 million facility was extended to an entrepreneur. The borrower spent RM500,000 each to renovate his office and his semi-detached house, and about the same amount on something called "The Ultimate Driving Machine". His business went under not long after.

Then there are the stories of a group of people whose expertise lies in preparing working papers for use in applications for grants or cheap government loans.

They are the so-called "experts" in crafting something out of nothing, at least on paper. They don't normally charge upfront, just a cut from whatever funding facility the applicant gets out of the tall stories they sell through the working papers. They cut their deals in hotel lobby lounges or, these days, "kopitiam" joints. Of course it's a given that those who engage their services have the business itself last on their minds. And when their businesses fail, they sheepishly say that they've tried their best.

Officials in the entities that assist and fund small- and medium-scale businesses said it was common for applicants to indicate their interest in the grants and loans. They were less interested in other services offered by the trade bodies, such as training and product promotion.

If it has come to that, then the award of grants should just be stopped. Instead, the government could consider offering just business loans and, even then, of amounts less than 100 per cent. The applicants must be required to come up with their own funds to make up the remaining capital needs. The days of government handouts must come to an end soon. This was one of the recommendations made by the National Economic Advisory Council (NEAC) in the New Economic Model document.

In its intended form, grants and cheap government loans are to assist business start-ups and expansion. In return, the businesses are expected to grow, generate revenue and eventually contribute to the overall economy. Grants and cheap government business loans are not for buying new cars or new bungalows.