I can think of two possible reasons that your grandfather might want to make a gift to you from his business.
1. He wants to claim it as a business expense. That's illegal. You said you assume he would not do this. Do you have any basis for that assumption? If he would not claim it as a business expense, why does he want to pay it from the business?
2. Another, less likely, possibility is that he has made gifts over his lifetime totaling more than $12 million, so that he would have to pay gift tax if he made a personal gift. He wants to make the gift from his business to evade the gift tax. That's also illegal.
The only proper way to do it is what Critter-3 said.
Before your grandfather makes any payments to you, he should consult the accountant or tax professional that he uses for his business.
