I can't really think of any drawbacks. Everyone is pretty literate these days and most forms are online with instructions.
https://www.grants.gov/web/grants/learn-grants.html

and believe the whole thing could be replaced with crowdfunding, VC's getting involved in local community and a simple hotline help-desk.

Pushback by the banks and by lobbying legislation. Also, finding out who is getting the 98% of prime government contracts and redirecting that. Doubt that list exists.
http://gtpac.org/2012/11/16/big-firms-edge-out-small-businesses-for-billions-in-awards/

Oh Wait! Here you go. It's from 2011 but doubt it's changed much.
http://pogoblog.typepad.com/pogo/2011/06/take-it-from-the-top-ten-contracting-behemoths-pull-in-25-percent-of-all-federal-contracts.html