A new £12.5 million fund to encourage women entrepreneurs was unveiled by Alistair Darling in last month's Budget. The money is part of the Chancellor's plan to boost the UK economy by encouraging female entrepreneurship through a series of funding and mentoring schemes.

The UK lags the US when it comes to women-led business, and the Government is keen to bridge the gap. Only 13 per cent of UK enterprises are run by women, compared with 30 per cent in the US.

The reason for the gender divide in UK business is complex and manifold, say experts. As in all workplaces, women can be limited by childcare and other family responsibilities. Government research also shows that women are more cautious with money and debt, and they have a greater fear of failure than men.

But Tanya Hine, president of the British Association of Women Entrepreneurs, says that women's greatest obstacle is obtaining funding from banks. “On the whole, banks make it much more difficult for women to obtain business loans than for men,” she says. “Women will either be refused a loan or given harsher lending terms than a man with a similar proposition. For example, the woman could be made to secure the loan against her house.

“Men benefit from having much more established networks in finance and business - they go drinking or play golf with their bank manager. Although we have made progress in recent years, business is still largely a man's world and women can struggle to break in.”

On average, women use only a third of the capital that men use to start up a business, says Jackie Brierton, of Prowess, the women's enterprise support group. She adds: “Unsurprisingly, if they face a hostile bank manager, women are more likely to rely on informal sources of finance, such as family and friends, as well as expensive forms of borrowing, such as credit cards and personal loans.”

Andrew Jupp, of Tenon, the accountant, says: “The credit crunch will undoubtedly make it harder for women to obtain these types of loans. Many businesses are funded by overdrafts or remortgaging, but all banks are looking to minimise their risks at the moment, meaning that business owners may find it harder to get loans of any kind.”

The Government is going some way to tackle these problems. However, details of the £12.5 million fund that was announced in the Budget have yet to appear and it remains unclear precisely how the money will be used, or when it will be available.

Mr Jupp says: “While this fund is welcome, the minimum investment needed to start a company is, on average, £250,000 - that means only 48 entrepreneurs would benefit from the fund. I would like to see it directed towards encouraging women with small businesses to go that extra step and expand their business into something more profitable.”

The Government is also extending various pilot schemes to help women entrepreneurs, many of which are based on successful schemes from the US. Women's Business Centres will provide advice and support in “easy to access” places - for example, some will be based in local government-run Sure Start Children's Centres. The business centres will be piloted in the South East, East of England, East Midlands and the North West.

A national mentoring network is also being devised by the Government, enabling established entrepreneurs to become mentors to women starting a business. Unfortunately, these schemes are still in the “inception” stage and it may be a while before they are introduced nationally. In the meantime, budding entrepreneurs could be forgiven for being overwhelmed by the complex array of grants, loans and support available.

Ms Brierton says: “Most funding aimed at women, or entrepreneurs in general, is provided on a regional level. Your first port of call will be Business Link, which is a government-run body that can direct you to your most appropriate local business support organisation.” For further details, go to businesslink.gov.uk.

If you find a bank loan hard to obtain, Community Development Finance Initiatives (www.cdfa.org.uk) can also help to provide loans for businesses. And if your idea has an artistic or community angle you could be eligible for a National Lottery Award for All grant of £5,000.

Of course, a business does not only need fundings. The support of a mentor or a chance to chat to other local business owners are also useful. Ann Davies, former president of the Basingstoke Women in Business Group, says: “I have found that the real assistance needed is the ability to bounce ideas around and to meet potential contacts and clients in a non-threatening environment. Women-only networking groups are invaluable in building confidence.”

The Prowess website, at prowess.org.uk, provides detailed lists of all the business support groups and special events in your area. Other support bodies, such as the Federation of Small Businesses and British Association of Women Entrepreneurs, may also be able to help.

CASE STUDY

Anna Brock built up her own catering business on her husband's farm in Alton, Hampshire. Anna's Kitchen makes traditional ready meals and has been extended recently to include a bakery.

The 37-year-old set up the business in 2004, cooking in her mother-in-law's kitchen. She has since converted two farm buildings into professional kitchens and has five full-time and three part-time staff. She obtained a grant from Defra and a bank loan to build her first kitchen. The second was funded by remortgaging her house.

“When I started, I found Business Link meetings really useful,” she says. “I also go to meetings of Hampshire Fare, a co-operative run by the local council for food and drink merchants. This was a great way of meeting buyers and other contacts.”

Mrs Brock says that business owners should utilise local services and professionals, adding: “I use an excellent local marketing company and my accountant has given me invaluable advice.”