Consumer advocates say some lenders are cashing in on those facing financial distress while under lockdown conditions.

Financial counsellor Peter Thompson has been fielding calls from families in lockdown on the edge of going broke.

“Basically there’s a state of shell shock out there from people,” he said.

He said those desperate for cash are using what he describes as “quick, easy and slick” buy now, pay later apps, like Afterpay, which you can download to your smartphone in minutes.

“People do use these products to put food on the table,” Mr Thompson said.

State and federal governments are offering income support for businesses and households.

But the demand for help remains high with Service New South Wales still receiving thousands of applications a day — a total of 245,000 applications since July 19.

Financial Rights Legal Centre senior policy officer Julia Davis said, for some struggling to put food on the table, the grants are not coming fast enough.

“It’s because they’re not getting the support they need from the government,” she said.

“You know this is a really hard time for anyone in NSW at the moment but especially those in Sydney who have been in hard lockdown for weeks and weeks.

“If people aren’t getting the support they need from the government, they’re going to turn to any option they have to feed their families.”

Service NSW is still working through a backlog of applications, with roughly 75 per cent of total applications now approved or paid.

Afterpay says fees aren’t a significant revenue stream

Gerard Brody from the Consumer Action Law Centre believes buy now, pay later lenders are taking advantage of the delays in government payments.

“And [they are] not really dealing with the underlying causes of people being paid on time or getting money when they need it.”

He said the firms offering quick lines of credit stand to make tens of millions of dollars in late fees as borrowers on tight budgets struggle to make good on payments.

“It’s certainly the case that buy now, pay later providers, such as Afterpay, are making money from late fees,” Mr Brody said.

“They’ve disclosed tens of millions of dollars into their coffers from late fees each year as part of their annual report.”

Afterpay rejects this and told the ABC that fees are not a major revenue generator, rather, most of its earnings, come from fee-paying merchants who accept payments from Afterpay users.

Buy now, pay later businesses need to comply with responsible lending obligations but they are not bound by the same credit laws as banks, because they don’t charge interest on their loans.

Mr Brody said the legal wiggle room has opened up a market for so-called wage advance companies, who provide customers with a portion of their wages ahead of time for a fee.

Some wage advance companies are now spruiking lines of credit to anyone with regular income, including those on welfare payments, according to Mr Thompson.

“These companies are targeting that demographic.

“As long as you’ve got a regular deposit being made into your bank account, whether that’s from earned income or Centrelink income, you can borrow a proportion of that deposited amount upfront for a 5 per cent fee.”

EverydayPay is an example of a wage advance provider and offers to pay customers’ wages early.

Its website states that “just because you’re receiving a government benefit, doesn’t mean you can’t get access to daily payments.”

MyPayNow, another wage advance provider, accepts Centrelink payments as proof of income, as long as you also have paid part-time work.

What if loans cannot be repaid?

It raises an obvious question.

What happens if you ultimately can’t make good on your loan?