The objective of the Small And Medium Credit Guarantee Fund is to provide credit guarantee to those small and medium enterprises that in normal operation but are short of collateral for external financing. The small and medium enterprises play an extremely important role in the economic structure in Taiwan. In early 1970's a great number of small and medium enterprises suffered from the recession and inflation brought up by the oil crisis. At the time the banking institutions turned to be conservative and request very stringent collateral requirements on small and medium enterprises' loan applications. Small and medium enterprises thus encountered great difficulties in obtaining financing. To cope with these situations, the SMCGF was established in 1974 to strengthen the financing or use the law of large number 『Credit Insurance』. to assistance SMES. Risk-shared arrangement is one of the features of the SMEG and insurance companies, the default rates in banking institution are worse day by day, how to control and reduce the default loss and moral risk in banking institutions is very important for SMCGF and Insurance Companies.