I'm aware its probably not an accurate portrayal, its just the kind of thing the UK/AU/NZ hears a lot from americans and we don't quite understand the narrow minded logic.
While you're right that the doll bludger should "just get a job", you thinking that isn't going to change the fact that they won't.
And if you can't find someone (=clients) paying you, you won't have a business. And if you can't make a case that someone would very likely pay you, they won't approve your plan.
Such programs aren't VC funds, they are a way to get tiny companies off the ground and to legalize under-the-table gigs (which are worse for both worker and state in the long run).
I'd rather my taxes went to someone trying to build a business than someone that "tries" to get a job only to get fired after a month every time.