A support fund set up to help Dubai's state-linked entities at the height of its debt crisis can now extend loans to more firms, if needed, according to a decree from the emirate's ruler on Sunday.

The Dubai Financial Support Fund (DFSF), set up in 2009 to disburse proceeds from a $20 billion sovereign bond programme to state-linked firms, can give grant loans and credit facilities to government and non-government entities alike.

The decree was posted on Sheikh Mohammed bin Rashid al-Maktoum's website and is effective from March 17.

'The amendment was intended to give the Fund the flexibility to support private entities that could have some kind of link to the government,' Dubai's department of finance said in an emailed statement.

Dubai has been digging itself out of a massive debt hole in the wake of a crisis that erupted publicly when flagship conglomerate Dubai World requested a standstill agreement on $26 billion of debt in 2009.

The company reached a debt restructuring deal with its creditors late last year.

The debt crisis coincided with already depleted valuations in real estate and investments in other sectors, as well as tightening liquidity at local banks, which closed off an important capital raising avenue for Dubai firms.

Despite ongoing restructuring talks - led by the $4 billion loan refinancing for the emirate's sovereign wealth fund Investment Corporation of Dubai (ICD) - optimism among investors appears to be returning.

Dubai's credit default swaps (CDS), or the cost to insure sovereign debt, have been consistently narrowing in recent weeks, with the emirate seen as a safe haven amid the political instability engulfing the wider region.-Reuters