The study investigates the problem of the policy funds for small & medium enter-prises’ job creation. Despite the support of the policy fund, some enterprises still face the possibility of insolvency. These small businesses can lose more jobs than they create. In contrast, small businesses which have the good financial ability to create jobs without the help of the policy fund can gain benefits from the fund. From these cases result an inefficiency of credit allocation. In order to avoid this ineffi-ciency, we need policy alternatives.