Cash is king, pure and simple. Without it businesses cannot operate, employees would not get paid and commerce would grind to a halt.

Small businesses employ a large percentage of the UK workforce which in turn generates a large amount of economic activity, making it essential for this sector to have access to cash on an ongoing basis.

However, unknown to many SME business owners, according to the Federation of Small Businesses, is the fact that there are a range of allowances and grants available to help and sustain such enterprises.

The most comprehensive source for grants in the UK is through businesslink.gov.uk that has access to over 2,000 grants for a range of purposes but anyone interested in applying for funding needs to possess resilience in large quantities.

With most of the financial support available to SMEs coming from the public sector, the process in obtaining some of it can be inherently difficult, often making commercial lending a more attractive proposition, according to Nigel Wilcock, a director of Ernst & Young’s small business practice and an expert on government funding for corporate investment.

Lee Bevan, managing director of Leapfrog Computers, found this out when, a number of years down the line after setting up his own IT company, he required a cash injection highlighting the fact it is not just new business concerns that can apply for funding.

He said: “Although annual sales were about £900,000 we did not have any financial clout but we were eligible for a government backed loan which we duly received. However, the process took an unbelievable amount of time and was also very complex.”

For companies seeking support, the best options are offered on a localised basis such as via regional development agencies or local authorities with very few organisations offering funding at a national level but those that do, such as are the Big Lottery Fund, Heritage Fund and the Prince’s Trust, tend to focus on specific industries.

A range of funds, awards and loans are available covering a multitude of commercial activities with some attracting more applications than others.

Research and development represents one of the most common reasons SMEs apply for assistance due to a lack of resources to undertake this task, often because the main focus is on sales and not developing new products or services but which is critical to a company’s longer term survival.

Wilcock said: “An important distinction in this area of funding is between research into new products and processes when grant support is readily available compared to the continued development of an existing product or process which usually means grant support is less likely to be forthcoming.”

Employment and training also account for a large number of requests for help due in part to the fact these areas account for a large part of an organisation’s running costs, often underestimated in the early days of an SME.

Such funding is usually linked to certain categories of employees that can, for example, involve sourcing and training workers who may be in high demand and therefore scarce but imperative to the successful running of a business. Training funding often takes the form of loans repayable over an elongated timeframe after a period of learning which, if having to be paid up front, may push employers into refusing training requests leaving them at a competitive disadvantage.

The EU has been instrumental in making provision for national governments to provide funding to the business community for environmental schemes and many SMEs apply successfully for such support. According to Wilcock, this area of support is one that will continue to grow because as well as being highly topical, environmental grant applications are typically for small amounts of money hence the fact that many companies can and do benefit.

Attempting to inject life into deprived areas of the country has meant that many SMEs have chosen to set up shop in or shift operations to such locations as they attract high levels of support and grants offered by local authorities eager to attract inward investment.

Wilcock said: “Such financial incentives can be a major reason why SMEs choose to base operations in previously blighted areas and although most of the support is in respect of jobs creation, funding can also be obtained to help with building costs, utilities and rates.”

Such financial lifelines appear to be a contributing factor to the growing number of SMEs but business owners need to be careful not to become overly reliant on this channel of finance given the finite nature of it.