Tougher lending standards imposed by the big banks since the banking royal commission have opened the door for non-bank lenders to grab a bigger slice of the market.

Key points: Ben Anderson turned to a non-bank lender for a business loan when he could not find a bank willing to lend him money

Ben Anderson turned to a non-bank lender for a business loan when he could not find a bank willing to lend him money Debt collectors were sent to his home twice when he could not meet his repayments

Debt collectors were sent to his home twice when he could not meet his repayments He says his dog arrived at a vet clinic dead after debt collectors entered his home

In some cases the interest rates charged by these lenders are extraordinary, and the practices of the debt collectors they work with are often unscrupulous.

One business owner who took out a loan at a massive rate of interest was targeted by debt collectors and lost his dog.

Ben Anderson, 45, poured his heart and soul into his small designer furniture business in South Yarra, Melbourne, but found he could not meet the overheads at his showroom.

Unable to find a bank willing to give him a loan, and desperate to keep his business from going under, he turned to an unregulated non-bank lender that charged 60 per cent interest. Initially he was paying a so-called discount rate of 30 per cent.

"It is very difficult for small business to get assistance through the big banks, and I think that's why maybe people tend to go for these types of loans," Mr Anderson told 7.30.

"There wasn't much of an option."

'I don't know what happened to Frankie'

Ben Anderson's French bulldog Frankie. ( Supplied: Ben Anderson )

Just before Christmas 2016, Mr Anderson signed on the dotted line to borrow $60,000 from First Mortgage Capital.

Not only did First Mortgage Capital charge exorbitant interest, it listed the principal amount of the loan as $83,854, with loan processing fees, research and management fees totalling thousands of dollars.

Mr Anderson's debt quickly spiralled, and First Mortgage Capital called in debt collectors who twice tried to take possession of his apartment.

The second time the debt collectors came to his apartment was in January 2018.

He told 7.30 he rushed home to find the debt collectors had removed panels from the wall of his apartment and removalists had shifted some of his furniture.

Worst of all, he said, they had called dog catchers to come and collect his beloved French bulldog Frankie.

"Removalists were trying to take my belongings and Frankie wasn't there, Frankie was nowhere to be seen," Mr Anderson said.

Hours later he heard from a nurse at a veterinary clinic several suburbs away.

"I got told that Frankie didn't make it, and I said, 'What do you mean she didn't make it, what are you talking about?' And then she says, 'Oh, she arrived deceased'.

"I said, 'What do you mean deceased? I left Frankie at home this morning, there is nothing wrong with my dog, what do you mean? I don't understand.'"

The Anderson family still does not know how Frankie died. Mr Anderson said he cannot bring himself to get another dog.

"To this day I don't know what happened to Frankie," he said.

"And probably that's part of why it hurts quite a bit, is I don't know the real story.

"So it is a very sad situation that I struggle getting through every day.

"I feel quite paralysed by the situation in a lot of ways."

'There needs to be greater regulation'

Gerard Brody from the Consumer Action Law Centre. ( Supplied: Consumer Action Law Centre )

Mr Anderson turned to financial counsellor Maria Turnbull for help.

"To break into someone's house and hurt animals is just horrendous," Ms Turnbull said.

"To be able to invade a person's privacy and property the way they did, has got to be held to account. It's disgusting, heartbreaking."

Late last year, Mr Anderson signed a settlement deed with First Mortgage Capital and paid them $85,000, a sum that was $25,000 more than he had borrowed in the first place.

First Mortgage Capital has not answered questions from 7.30 despite repeated requests, while the debt collectors could not be contacted.

Ms Turnbull said high interest rate loans like Mr Anderson's were increasingly common.

"Unregulated lenders are gaining a foothold, and they're relentless in their practice, and their contracts are unconscionable," Ms Turnbull told 7.30.

Consumer Action Law Centre chief executive Gerard Brody said business borrowers could not rely on consumer protections when things went wrong.

"There is a growth of lenders specialising in small business lending, and many of them are now operating online, some of them at very high interest rates," he said.

"There does seem to be growth in this area, and I think it's a problem if our regulatory regime doesn't capture them in the way it captures other lenders."

Mr Anderson's family wrote to the banking royal commission about his loan and the actions of the debt collectors.

But Mr Brody said debt collectors were not covered by commissioner Kenneth Hayne, and the commission recommended very few changes to business lending rules.

"It was disappointing [the banking royal commission] didn't make recommendations about small business lending," Mr Brody said.

"There does need to be greater regulation on these second and third-tier lenders that focus on small businesses."