Fast loan group Bizcap drains small business customer’s accounts fast

by Michael West | Dec 6, 2023 | Business, Latest Posts

Small businesses are struggling enough in the current economic climate without combatting aggressive lenders. Michael West looks at the case of Ben Shamgar and “Australasia’s most open-minded lender” Bizcap. 

Ben Shamgar has had a rough trot. He lost a relative in the Hamas attacks on Israel on October 7. His lenders were aware of this, he says, yet they pulled their business loan with him after a technical breach, appointed a receiver – he missed a loan repayment – and quickly drained the cash out of his bank accounts too; that’s his personal cash as well as business banking, without warning.

Have his lenders from Bizcap got the legal right to do that? It’s doubtful. We put a number of questions to them and received no response. 

Bizcap, which specialises in quick-turnaround small business loans, is not registered with the Australian Financial Complaints Authority (AFCA), appears to rent an Australian Financial Services License (AFSL) from Guildfords, a funds management group in Melbourne. An AFSL is for providing financial advice, not lending money. And an Australian Credit Licence (ACL) is the licence required for lending money. MWM was unable to establish whether Bizcap had an ACL.

Receivership for sole trader?

Whether it has powers to appoint a receiver to Ben Shamgar’s business is questionable as he is a sole trader. 

Bizcap offered Shamgar a loan, and it was only 13 days into the loan and they appointed a receiver. He was previously a customer of Bizcap. He paid that loan out and they rang him up and offered him another loan, this time for $150,000. He missed one payment, offered to make a manual payment, and they put in a receiver and took money out of his bank accounts. 

“We’ll offer you 150k refinance,” said Shamgar, “and i thought yes that’s good for Black Friday sales – 150k in extra stock would be good. I missed a payment, but told them over the phone I would make the payment manually.

“They agreed to the manual payment – and I spoke to them Tuesday last week – and I woke up Thursday morning and logged on to the CBA app and saw that all my bank accounts had disappeared. No visibility. I rang up CBA and asked them what the issue was. They told me to speak to someone else. She was from Bizcap’s lawyers.

“I knew they would have visibility. But didn’t realise they had the power to control your bank accounts. So I went to NAB and withdrew some money from ATM cards. But $47k was gone from NAB as well. That left me without money to pay the rent.”

They put in a receiver although I’m a sole trader and garnished all my personal savings as well. I still don’t have access to the accounts today. It was 13 days since the loan was signed.

“I missed the first payment and tried to make the second manually. They said today they would remove the receiver and set up a payment plan and I wondered why they did not set up a payment plan in the first place.”

Perfect trading history

Or ring him. Shamgar says he had had a perfect trading history for 12 months. The interest charged on his loan was 77,000 over 22 weeks. The original loan amount was $150,000 and they wanted $225,000 back. 

Under the previous government, which relaxed Corporations laws to lend flexibility for businesses during Covid, a number of short-term lenders bobbed up and some thrived, such as Bizcap. While large companies which accessed the JobKeeper subsidy, many of which did not need it, and which actually increased their revenues, small businesses struggled in lockdown. It is likely, although research is scant on the subject, that many small businesses will have been put under by these equivalent of payday lenders charging, as was Shamgar’s case, 100% interest.

Unhappy Banking’s Geoff Shannon, who has assisted Ben Shamgar, said “it is a serious problem in this current economic climate”. 

“In this case, the loan contract was executed without any legal advice for the borrower. The loan contract term is not described in the contract, it states 22 either days or weeks.

“The net advance from the loan was only $106,491.60, from a loan amount of $150,000.00 as the Lender deducted $43,508.40 for establishment fees etc. On the 13th day of the loan, Bizcap appointed receivers to the Shamgar bank accounts and his assets. 

“He had circa $46,000.00 in his bank account which the receivers now have full control over. Also, the receivers have withdrawn the full amount, leaving Mr Shamgar to be without any money and unable to feed himself let alone pay rent and creditors to run his personal business.

Bizcap has now charged a default fee of $22,500.00, with the loan payout now exceeding over $235,000.00 being in real terms 130% over and above what Mr Shamgar actually received some 16 days ago.

Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.

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