Alternative Lenders — Pros And Cons Of Merchant Advances And Online Loans

Alternative lending is growing fast in Canada, offering speed and flexibility when banks say no. But it comes with risks—high interest, daily repayments, and compliance confusion. Mackisen CPA Auditors Montreal helps businesses evaluate, compare, and manage alternative financing options safely while maintaining full CRA and Revenu Québec compliance.

Legal and Regulatory Framework
Bank Act (Canada) Section 462: Defines legal lending parameters.
Income Tax Act (Canada) Section 20(1)(c): Allows interest deductions if loans generate business income.
Taxation Act (Quebec) Section 34: Mandates transparent reporting of loan costs and interest.
CPA Canada Handbook Section 1500: Establishes standards for debt disclosure.
Consumer Protection Act (Quebec): Governs merchant advance agreements and disclosure terms.

Key Court Decisions
Beaudoin v. The Queen (2020): Denied deductions on non-compliant loan interest.
Royal Bank v. Canada (2019): Confirmed lenders’ right to full repayment verification.
Simard Beaudry Construction v. Canada (2019): Validated CRA review of alternative financing use.
Tremblay Holdings v. The Queen (2021): Highlighted risks of misreporting high-interest debts.
Lincora Group v. Quebec (2019): Penalized incorrect interest deductions.

Why CRA and Businesses Review These Loans Closely
Merchant advances and online loans blur lines between financing and revenue sharing. CRA may disallow related deductions if not reported properly. Mackisen CPA Auditors Montreal ensures accurate classification, disclosure, and reporting of all alternative lending structures.

Mackisen Strategy
Debt Evaluation — Compare effective interest rates and repayment terms.
Cash Flow Forecasting — Assess affordability before borrowing.
Loan Structuring — Classify advances and repayments correctly for tax compliance.
Interest Deduction Review — Identify deductible vs. non-deductible components.
Debt Disclosure — Prepare transparent financial reporting for CRA.
CPA Monitoring — Supervise repayment tracking and accounting integration.

Powering Client Needs and Lending Flexibility
A Montreal café owner avoided insolvency after Mackisen restructured high-cost merchant advances. A Quebec e-commerce business reduced interest expenses by refinancing with traditional credit. A Toronto start-up improved compliance with Mackisen’s CPA-supervised online lending reports.
How Mackisen Clients Benefit

• Safe navigation of alternative lending options

• Accurate CRA and Revenu Québec compliance

• CPA-certified debt classification

• Better loan management and reduced costs

• Transparent reporting for future financing

Common Questions
Are merchant advances legal? Yes, but they carry strict terms.
Can I deduct interest from alternative loans? Yes, when properly classified.
Does CRA audit online lenders? Yes, they review business deductions and usage.
Can Mackisen manage debt tracking? Absolutely—with full CPA oversight.
Is refinancing possible? Yes, Mackisen helps restructure costly loans.

Why Mackisen
Mackisen CPA Auditors Montreal protects businesses from the pitfalls of alternative lending. We combine CPA oversight, compliance expertise, and strategic guidance to keep your business financed safely and sustainably.