"while it was not income type which makes QBI and SE tax since it is a grant."

Okay, let's try this: If your client has/had business income, pretend this came from one of these people, too. It's part of Ordinary Business. "Grant" = not going to be repaid. But "grant" in this case is because of the business.

Follow the process: the Feds made funds available to States, who made it available to Counties and agencies and other entities, who awarded it to applicants based on the Business details.

You seem to be confusing Stimulus Funds paid to individuals, and Business Grants.

And I still don't see where it has been noted what the person listed when they applied for this grant. Examples:

A DJ submitted to replace lost income from Events = no different than if the performances had happened and been paid.

Or:

A Mental Health counselor submitted for covering the extraordinary costs for PPE, telehealth camera/mic equipment = some disease prevention grants are not taxable, even for Fed purposes.

You will have to know this.