Display posts from Custom Post Type in category page on front-end

You are better off separating categories for posts and using custom taxonomy types for CPT categories.

You’d add this line to your register cpt code

'taxonomies'   => array( 'bizdirectory-type' ),

Replacing this line in your code.

'taxonomies' => array( 'category' ),

And then add this code in your functions.php

add_action( 'init', 'wpsites_custom_taxonomy_types' );
function wpsites_custom_taxonomy_types() {

register_taxonomy( 'bizdirectory-type', 'bizdirectory',
    array(
        'labels' => array(
            'name'          => _x( 'Types', 'taxonomy general name', 'wpsites' ),
            'add_new_item'  => __( 'Add New Bizdirectory Type', 'wpsites' ),
            'new_item_name' => __( 'New Bizdirectory Type', 'wpsites' ),
        ),
        'exclude_from_search' => true,
        'has_archive'         => true,
        'hierarchical'        => true,
        'rewrite'             => array( 'slug' => 'bizdirectory-type', 'with_front' => false ),
        'show_ui'             => true,
        'show_tagcloud'       => false,
    ));

}