More than £400 million of Small Business Rate Relief remains unclaimed and tied up in red tape, according to Birmingham Chamber of Commerce and Industry.
In a response to a Government consultation on the scheme, the organisation is calling for the system to be simplified to help more small firms.
Presently, less than half the eligible small companies have applied for the relief.
Charlotte Ritchie, BCI policy executive, said: "We are emphasis-ing the need to reduce the administrative burden of filling in forms and abolish the requirement for small businesses to reapply for the relief each year. These changes will be crucial to ensuring all of those businesses eligible for the relief actually receive it.
"Small businesses generally are often confused about business rates, how they are collected and spent and many don't realise that they are entitled for the SBRR. The unnecessary complexity and paperwork surrounding the process of applying for the relief is also likely to have put some businesses off."
The SBRR was introduced in April 2005 and gives a percentage rate relief for all properties with rateable values of up to £10,000, including a 50 per cent rate relief for those with rateable values up to £5,000.