Borrowing from customers is a form of microfinancing
January 30, 2012
Pierre Crichton comments in the National Post on retailers who finance their businesses by borrowing money from customers through microfinancing via prepaid purchases.
There are a number of issues borrowers and lenders need to consider before doing this. These include whether an arrangement would trigger provincial securities laws, or taxable income considerations. These kind of loans could even “trigger a criminal code rate of interest. Section 347 of Canada’s Criminal Code pins the criminal interest rate at 60% a year.”
“Borrowing from customers is a form of microfinancing” is written by Drew Hasselback.