I totally agree. $7k is irresponsible. Especially small productions lack insurance. If something happens you're screwed. Additionally (as someone wrote before): No quality equipment and no actors (NO actor should work for free which in this case they would have to). Not to forget about editing and coloring (to be able to sell it).
Technically this grant supports irresponsible filmmaking and not paying the actors and crew. The only way to get this done is one person all by himself (and maybe one paid actor) if he already owns all the equipment or people do it as a favor (which lowers their work ethics).
I have a two location Sci-Fi and my absolute minimum budget would have to be $17k. I guess you could make an acceptable feature for $15k though if you pay them all.