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What is Bitty Advance? The Ultimate Guide

A Quick Overview of Bitty Advance

Bitty Advance is a merchant cash advance (MCA) provider – that offers fast, flexible funding to small businesses. They’ve been around since 2018, and operate in all 50 states.Basically, an MCA is when a company like Bitty Advance “buys” a portion of your future revenues. They give you a lump sum upfront, and you pay it back plus fees from your daily credit card sales.So in a nutshell, Bitty Advance can get you capital quickly – without the hassles of a traditional bank loan. But as you’ll see, these advances come at a steep price.

How Does Bitty Advance Work?

With Bitty Advance, you can get funded from $2,000 up to $250,000. The application process is pretty straightforward:

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  • You apply online or over the phone
  • They review your business’s financials (bank statements, credit card sales, etc.)
  • If approved, they calculate a “purchase price” based on your revenues
  • You get the lump sum within 1-2 days
  • You pay them back, plus fees, through a percentage of your daily batched sales

For example, let’s say you own a restaurant and take $5,000 in credit card sales per month. Bitty could advance you $10,000 upfront.Then they might take 20% of your batched sales each day until the advance, plus their cut, is paid back. So $1,000 per month from your $5,000 in revenues.The big advantages are:

  • Funding in as little as 24 hours
  • No credit check required
  • Straightforward approval based on revenues
  • Flexible daily repayment schedule

But there are some major downsides we’ll cover in a bit. First though, let’s look at the qualifications.

H2: What Are the Requirements for Bitty Advance?

To qualify for funding from Bitty Advance, your business needs:

  • A business bank account
  • At least 6 months in operation
  • $5,000+ in monthly revenues
  • 450+ credit score (for some programs)

They say they consider “all industries” – so it’s pretty broad in that sense. Though certain businesses like gambling, cannabis, and adult entertainment may not qualify.One thing to note – while they don’t do a “hard” credit check that impacts your score, they do pull your personal credit report. So you’ll need a reasonably decent score.

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The Pros and Cons of Using Bitty Advance

Like most alternative business lenders, Bitty Advance has some clear pros and cons. Here’s a quick rundown:

The Pros:

  • Lightning fast approval and funding process
  • Lenient qualification requirements
  • Flexible, daily repayment schedule
  • No hard credit check required
  • Early payoff discounts available

The Cons:

  • Extremely high annualized interest rates
  • Short repayment terms (as little as 3 months)
  • Personal guarantee required
  • Potential for debt trap cycle
  • Confessions of judgment in contract

That last one – confessions of judgment – is a huge red flag. We’ll explain what that means in a bit. But first, the big question…

How Much Does Bitty Advance Actually Cost?

This is where things get a little murky with Bitty Advance – and MCAs in general. Unlike a traditional loan with a stated interest rate, the fees get baked into something called the “factor rate.”So if Bitty advances you $10,000, they might charge a 1.4 factor rate. That means you’d pay back $14,000 total ($10,000 x 1.4).On the surface that doesn’t sound too bad, right? But remember, you’re paying that $14,000 back from a percentage of your daily sales over 3-6 months.When you crunch the numbers, that $4,000 in fees equates to an annualized interest rate of 40-80%! Those are straight-up predatory loan shark levels.And it gets worse – Bitty Advance’s factor rates can go as high as 1.49 based on their underwriting. So you could easily be paying triple-digit annualized interest.To put that in perspective, most bank loans for small businesses max out at 8-10% APR. Even bad personal credit card debt tops out around 30% interest.

The Debt Trap Cycle

Because of those sky-high rates, many businesses get stuck in a vicious debt cycle with Bitty Advance and other MCA lenders.Let’s say you take a $20,000 advance, but your revenues dip temporarily due to a slow season. Well now that 1.4 factor rate just went from 40% interest to 80% or more based on the term.So you get behind on payments – racking up even more fees and interest charges. Before you know it, you owe $30,000 or $40,000 on that original $20k advance.At that point, your only option is taking another advance from Bitty (or a competitor) to pay off the first one. But now you’re stuck in a never-ending debt trap, paying usurious interest rates.This is why so many business experts warn against using merchant cash advances except as an absolute last resort.

The Dreaded Confession of Judgment Clause

If that debt trap wasn’t bad enough, Bitty Advance’s contract contains a really nasty provision called a confession of judgment clause.What this means: If you default on your payments, Bitty Advance can legally obtain a judgment against you without going through court. No hearing, no notice – they just take the judgment.From there, they can garnish your wages, freeze your bank accounts, place liens on your property or business…and you have zero recourse to fight it.Basically, you’re surrendering your due process rights before you even take the advance. It’s incredibly predatory and one-sided.In fact, confession of judgment clauses are illegal in many states – but unfortunately still allowed in Florida where Bitty Advance is based.

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“They had no right to clean out my bank account like that!”

You can find horror stories all over reddit.com and other forums from business owners who got blindsided by a Bitty Advance confession judgment.One person wrote: “I was behind a few weeks but was still making payments. Then one day, my bank account was just cleared out without any warning. Bitty had taken nearly $100k!”Another reddit.com user said: “Bitty Advance took a confession judgment against me and started garnishing my paycheck. I had no idea they could even do that without giving me a chance to respond in court.”It’s a shockingly abusive practice that can devastate small businesses. If you do work with Bitty Advance, that clause alone is reason to be extremely cautious.

Alternatives to Bitty Advance

Given the potential pitfalls of merchant cash advances, it’s smart to explore some alternative funding options first:

  • SBA loans – Low-interest government-backed loans up to $5 million, though the application process is quite intensive.
  • Bank term loans – Larger banks offer decent terms to qualified borrowers, but have strict approval criteria.
  • Lines of credit – These give you access to revolving capital as needed, usually with reasonable rates from banks.
  • Invoice financing – You get an upfront advance on outstanding invoices, which gets repaid when the customer pays.
  • Equipment financing – If you need funds for equipment or machinery, these self-collateralizing loans are a good option.
  • Personal loans for businesses – Using your own credit to access funding, though rates are typically higher.

There are also online “fintech” lenders like OnDeck, Kabbage, and BlueVine that offer short-term loans or lines of credit. Their rates are higher than banks, but much lower than an MCA.

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H3: Consider a Nonprofit Credit Counselor

If you’re already trapped in a vicious MCA debt cycle with Bitty Advance or others, look into nonprofit credit counseling agencies. They can potentially renegotiate your terms or set up affordable payment plans.You can find legit nonprofits through the National Foundation for Credit Counseling (nfcc.org) or Association of Independent Consumer Credit Counseling Agencies (aiccca.org).Just avoid any for-profit “debt relief” companies promising to negotiate on your behalf. Most of those are extremely shady and charge hefty upfront fees.

How to Complain About Bitty Advance

If you’ve had issues with unethical practices, hidden fees, or abuse of the confession judgment process from Bitty Advance, there are a few ways to file complaints:

  • Better Business Bureau (bbb.org) – Bitty Advance has an F rating currently due to unanswered complaints.
  • Consumer Financial Protection Bureau (consumerfinance.gov) – You can submit complaints about any type of lender here.
  • Your state’s attorney general’s office – They have consumer protection divisions to investigate predatory businesses.

You can also try negotiating directly with Bitty Advance’s customer service. But don’t get your hopes too high – their online reviews show a pattern of ignoring or giving the runaround to complaints.Lawsuits are always an option too, but that gets expensive quickly. A more affordable route may be consulting with a consumer protection lawyer through services like avvo.com or lawinfo.com to understand your rights.

The Bottom Line on Bitty Advance

At the end of the day, Bitty Advance is pretty typical of the merchant cash advance industry. They offer fast, easy money – but at an extraordinarily high cost that can trap unwary businesses in crushing debt cycles.The confession of judgment clause is particularly egregious and something every borrower should understand before signing.My advice? Exhaust every other possible funding option first before even considering an MCA like Bitty Advance. The risks and fees are simply too excessive for anything other than a short-term, calculated last resort.

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