More than 1,700 loans have been disbursed under the Enhanced Micro Loan Programme in just over a year since it was introduced, a boon to start-ups that often struggled to get initial bank loans.

The loans of up to $100,000 are taken up by companies that are less than three years old, said Spring Singapore, an agency responsible for helping Singapore enterprises grow.

"We are hoping to see more young enterprises take the opportunity to tap the Enhanced Micro Loan Programme to grow their business," Ms Chew Mok Lee, assistant chief executive (capabilities and partnership) of Spring Singapore, told The Straits Times.

She said OCBC Bank has made significant headway in helping these new companies,contributing more than 50 per cent of the number of loans under the programme.

More than 10 financial institutions participate in the scheme.

For young entrepreneur Li Yanyan, 32, the OCBC loan came as a lifeline when the bank offered her $25,000, which she was able to use to pay her staff's salary and other overheads in February this year.

As her business was barely a year old, Ms Li was initially unable to get a business loan when she discovered that her $50,000 capital was running low some time in January.

"I was quite demoralised. Most of my capital was spent on developing a mobile application for the business. I would have to cease my operation if I could not get any funding," said Ms Li.

Ms Li, who used to work in a market research firm, started Meggnify last January to develop a mobile phone application that collects quick data for businesses, for market research.

A survey by OCBC last year showed that 50 per cent of start-ups require funding to kick-start their business growth, and 80 per cent of them need it within the first two years of commencing business operations, said Mr Eric Ong, head of emerging business, global commercial banking, at OCBC Bank.

The survey, which was conducted with 400 start-ups and existing business owners with turnover of up to $5 million last year, also showed that only 11 per cent of the businesses had their financing needs met by banks at an early growth stage.

Even though emerging businesses make up more than 90 per cent of the total enterprise population in Singapore, it had been difficult for start-ups to get bank loans as they lack a track record and are seen to be more risky investments.

To spur lending to the young small and medium-sized enterprises (SMEs), the Government has increased its share of the loan risk, from 50 per cent to 70 per cent for sums less than $100,000 under the Enhanced Micro Loan Programme.

Last April, OCBC launched its Business First Loan - a collateral- free loan of up to $100,000 - for start-ups as young as six months old.

OCBC Bank, which is the only bank to offer loans to six-month- old businesses, said 40 per cent of its borrowers are businesses between six and 12 months old.

Ms Liew Wei Yong, 35, who started fitness-training firm Train Live Compete 11/2 years ago, said: "I had used my savings to start this business.

"With a $100,000 bank loan, I will definitely be able to expand my business."

But she said she will go to a bank only when she has "a very good proposal" as the loan has to be paid back.