This study is the first to apply incomplete contract theory to policy funding in Korea. There have been many studies on the necessity of policy funding for SMEs. However, there is a lack of research on how to resolve the asymmetry of information, which is the root cause of the need. Therefore, it is a very meaningful to study alternatives that can fill the gaps of existing studies while achieving the purpose of policy funding. The purpose of this study is to derive policy implications of policy funding for SME based on incomplete contract theory. Specifically, we have proposed ways to establish legal rights of policy fund provider and secure expertise for implementing the rights. Through these discussions, we have made the following contributions. First, we review the policy improvements to mitigate the asymmetry of information and suggest the rationale for expanding the supply of policy funding. In this process, we also argued that the dichotomy of policy funding and policy fund provider is no longer valid and provided practical basis for development of domestic capital market through revitalization of market for corporate control. In addition, we have examined ways to maximize the applicability of implications with the example of SBC(Small Business Corporation). This study has significance both in regard to pioneering a new field of study related to incomplete contracts in Korea as well as providing theoretical grounds with policy funding for SMEs, which could not be supported by governments under incumbent system.