how does government support small scale businesses

Interest Rates
The Federal Reserve can alter the Federal Funds Target Rate—the figure that directly influences the prime interest rate—to stimulate lending to businesses and consumers. When the prime rate dips, borrowing becomes more profitable. This encourages businesses to expand, and allows consumers to experience temporary increases in discretionary income.

Tax Incentives
Aside from the age-old argument that lower corporate income taxes encourage business activity, the government has other techniques in its tax toolkit that can stimulate specific industries. Tax incentives to certain types of businesses, or incentives for consumers who patronize certain industries, can give fledgling markets a powerful boost. A prime example of this is the business and residential solar power industry. Tax incentives encourage entrepreneurs to start new solar power businesses, and incentives to purchasers encourage small businesses and families to purchase solar equipment.

Trade Policies
Foreign trade policies, such as tariffs and import quotas, can be lowered or eliminated to encourage foreign trade. Relaxed trade restrictions and free-trade zones can allow local businesses to realize significant cost savings, allowing them to increase their bottom lines. The ability to outsource labor and manufacturing to lower-cost markets in addition to sourcing cheaper materials helps to increase profit margins, encouraging business expansion.

Contracting
Government entities directly encourage business activity when they contract with private companies to perform government responsibilities. Counties, for example, can contract with third-party road pavers, snow plowers and towing services rather than creating internal departments for these activities. At the federal level, contractors are used for war-zone logistics and intelligence processing, among other things.

Grants, Loans and Disbursements
The government has access to an entire population's worth of individual and business tax money, and has the ability to distribute that money to affect change throughout the economy.

Loans and grant programs offered directly to entrepreneurs are one way to use tax revenue to stimulate business activity. Another way, according to America.gov, is to fund agencies and programs such as the Small Business Administration, which provide assistance to startup entrepreneurs. Unemployment and other federal assistance benefits ensure that a large number of people have enough money to pay their bills, leaving them with extra discretionary income that generally falls into the hands of businesses