Alice’s Fund

Alice Dittman, the 81-year-old matriarch of Nebraska banking, has launched a micro-lending program with a million-dollar gift to a local community development organization. Dittman, now retired, was the long-time chairman of Cornhusker Bank in Lincoln, Neb.. The program, which opened July 28, already has funded four businesses. Dittman said she started the program because she wanted to do something to help start-up businesses, but also because she wanted to generate positive attention for the banking industry. "There is a heart in banking," Dittman said. "I want people to see that.". Dittman said she has been interested in micro-lending for a long time and that travel to places such as Egypt helped her to see the importance of credit for enabling fledgling entrepreneurs to acquire business essentials.. The program is called Alice's Integrity Loan Fund and was established through the Lincoln Community Foundation. The program is being administered by Deb Payne at Community Development Resources. Payne is a former entrepreneur with an educational background. She screens applicants and arranges business counseling/education sessions for recipients.. Ironically, Cornhusker Bank was one of seven banks which teamed 15 years ago to launch Community Development Resources, which helps potential borrowers who have been turned down by a traditional bank. In 15 years, the organization has helped some 260 business owners obtain financing. Applicants to Alice's Integrity Loan Fund, however, do not need to be first turned away by a traditional bank. Dittman hopes to lend to at least 200 businesses in the next three years.. The mission of Alice's Integrity Loan Fund is to provide limited capital to individuals who commit to being self-sustaining entrepreneurs. The funds are to be used for start-up business ventures or to enhance existing business growth opportunities.. The maximum initial loan amount is $5,000, but if the borrower repays the money as scheduled, he or she is eligible to apply for another loan of up to $10,000. Loans have a fixed rate of 6 percent and are to be repaid in three years with monthly payments. The loans are unsecured, although program promotional material notes that "evidence should be provided to assure that funds are used for the intended purposes." Furthermore, the program stipulates: "Some type of measurable equity must be provided. Equipment or inventory purchased with loans from this fund should not be pledged as collateral to other lenders." . Just enough to get started. Dittman admitted that $5,000 is not a lot of money to get a business going, but said that the frugal amount forces borrowers to think hard about their anticipated expenses. She said two of the initial four loan recipients wanted more than $5,000 but were able to reduce the amount of requested funds once encouraged to rethink their application. Dittman said that after obtaining a couple of loans through the program, a borrower would likely be in position to obtain a micro-loan through the Small Business Administration. SBA's micro-loans start at $50,000.. Loan recipients so far include a beauty parlor owner who wanted to add a third chair to her operation, a woman with a digital video business called "Picture This," a counselor, and a woman who sells candles. Dittman takes an interest in each borrower and even had plans to have all of them over to her home.. "I have a friend who owned a beauty parlor for a long time so I arranged for her to be a mentor for our first loan recipient," Dittman said. The mentor visited the borrower's shop and has agreed to check in by phone once a month to discuss the business's progress. Dittman said she would like to find mentors for all her borrowers.. Payne directs loan applicants to any one of a number of free business counseling services, including SCORE, the University of Nebraska Entrepreneurial Center, Southeast Community College and the Nebraska New Business Development Center. Once applicants receive a loan, Payne provides counseling herself. She meets with the loan recipient weekly for a month; she remains available to them whenever they need technical assistance.. The purpose of Alice's Integrity Loan Fund is to encourage self-sufficiency, self-discipline, and social responsibility through education, a business plan and personal encouragement to achieve personal goals. Dittman said she believes personal integrity is the most important criteria for the expectation that a loan will be repaid. The lend-and-repayment format of the fund permits the donated money to be used over and over again, Dittman said. "This implies a responsibility on the part of the loan recipient to commit to helping others when their success permits," she said.. Applicants for a loan do not have to have stellar credit. The fund is not meant to exclude people with marred credit histories. Loan applicants who demonstrate that previous credit troubles have been addressed remain good candidates for Integrity Loan Fund money. Even bankruptcy is not sufficient reason by itself for a denial.. Money from the fund is not intended to refinance existing debt. And applicants must be residents of Lancaster County in Nebraska, or be able to demonstrate how the loan would benefit residents of Lancaster County. . Character counts. Dittman said applicants will be assessed 40 percent on character, 30 percent on capacity, 20 percent on commitment and 10 percent on capital. Applicants must have a track record of timely payments, be able to demonstrate service to others and be absent of any history of destructive personal behavior or addiction. All applications must include a business plan.. Program materials state: "It is the fund's intent to teach responsible use of credit. Understand that personal honor pays loans. Most importantly, the borrower must have the pride to honor their word and keep their reputation sound.". Dittman said she likes the fact that a lending fund gives her the opportunity to help many more people than a grant program. "At $5,000 per recipient, that would be 200 people," Dittman explained. "But if recipients pay the loan back, we may be able to help 400 or 600 people.. "When I met the first recipients, I told them that if they don't pay the money back, someone in the future won't get a loan.". Part of Dittman's preparation in creating this program was a visit to the Omaha, Neb., office of Grameen Bank, the micro-lending institution that started in India.. Dittman became the first female president of the Nebraska Bankers Association in 1993-94. Over a career, which started in 1960, (or 1948 counting summer work in a bank during high school) Dittman has been very active in the industry, serving on the board of the American Bankers Association and serving as president of the Nebraska Electronic Transfer System, among other commitments.. Cornhusker Bank was founded in 1903 as the Farmers State Bank. It was renamed in 1960. She and her husband, Marc, ran the bank before starting the First National Bank in Richmond, Mo., in 1965. Marc Dittman died in 1975, the year Alice Dittman returned to Cornhusker Bank after a decade in Missouri. Today the bank has 108 employees, nine offices and $369 million in asset.. Dittman said if the program is successful, she would like to open participation up to other banks to fund loans. Dittman envisions a no-hassle way for banks to fund loans while Community Development Resources handles the details.