The algebraic loop does not depends on continous ou discrete nature of the process, but on the direct transfert of the input to the output of your system. In your case, I would bet that the system is exactly proper : the output is y(t)=gain.u(t)+something that depends on state. The same thing could happen in discrete time. If the system is linear, then its transfert function has numerator and denominator of the same order.
It is very likely that some dynamics have been neglected in the system modeling because most of physical systems are strictly proper.
You may fix this by adding an actuator dynamics. Alternatively, adding a memory bloc on the output or the control will solve the problem but it is not so nice.
