Grants affect the way companies invest, the Engineering and Machinery Alliance has insisted.
It says as much as 50 per cent of mechanical engineering SME investment in areas such as R&D, training, IT and machinery would not take place without them.
In a report on the industry's views and use of grants, the EMA found that companies' biggest criticisms of the grants' regime were targeted at the complexity of the system and the consultancy business that has grown up around it because it is seen as so complicated.
In its May Budget the Government expressed concern "at all levels that the proliferation of business support schemes has created a complex picture making it difficult and time consuming for businesses to access relevant support".
EMA's findings indicate where some of these problems may lie.
While most firms think that applying for grants is too complex, six in ten companies say that they aren't well informed about grants and only just over a third see themselves as successful in making applications.
However, firms in the West Midlands are of a different view. Nearly two-thirds of companies in the region say they are well informed, seven in ten that they are successful.
"This is well above the average scores amongst all firms applying," said EMA chairman Graham Hayes. "It seems to indicate that the agencies in the West Midlands are more successful in their communications with SMEs on these issues."
Accounting for four in ten contacts across the country, Business Link is the agency most commonly contacted for grants, rising in the regions to eight in ten of all contacts in the East of England and by company size to over seven in ten amongst micro firms - those employing ten or less.
Just over two-fifths of companies applying for grants use a consultant. However, only 13 per cent thought the money well spent.
This may be because while a third of consultants take four per cent or less, approaching another third charge 20-29 per cent of the grant for their services - typically £5,000 on a £25,000 grant.
Business Link and the Manufacturing Advisory Service both enjoy a positive reputation, well ahead of other agencies including UKTI, RDAs and the EU.
However, even in their case a fifth of respondents rate them negatively, indicating as with the other agencies that delivery across the country is erratic.
Six in ten firms had applied for a grant in the last ten years, with a third applying on aver-age every two or three years.
A majority of firms (53 per cent) had applied in 2005. However, four in ten firms in the East of England had last tried for a grant five of more years ago, and half the firms in the South-east hadn't made an application for three or more.
The report has some good news for the government and its attempts to promote innovation.
Overall, R&D attracts the largest number of applications, followed by training, exporting and investment in machinery, with some variation in preferences according to the size of the company involved. Micro firms sought marketing support including exporting first (50 per cent), followed by R&D (25 per cent).
Nearly four in ten small firms focused on R&D and training followed by invest-ment in machinery, while the top choice for medium sized companies (employing 50-249) was training (24 per cent), with close to a fifth applying under each of the R&D, exporting and IT investment categories.
Few firms think they are in a good region for grants (17 per cent). Many reckon they are not (38 per cent) and 45 per cent don't know.
Even companies that are successful in applying tend to think that their region isn't good for grants or don't know.
Opinion generally is equally divided about whether grants offered in other regions threaten 'my' competitiveness.
Companies in seven of EMA's eight member associations took part - British Auto-mation and Robot Association, British Paper Machinery Suppliers Association, British Turned Part Manufacturers Association, Gauge and Tool-makers Association, Manufacturing Technologies Association, Printing, Paper-making and Converting Suppliers Association, and the Processing and Packaging Machinery Association.