Sayed Moosawi, 26, from Carramar, and Freddie Chaloub, 43, from Merrylands, were both on bail awaiting sentence on drug supply charges when they are alleged to have twice attended Crazy Kayaks in Albion Park Rail for the purpose of extorting money from shop employee Chen Khov.

Court documents said Mr Khov, a former problem gambler, borrowed $18,000 in 2014 from an unknown man he met through an acquaintance at a Sydney pub.

He told police he gambled away the entire amount at the time but had since managed to quit and stopped frequenting such places, causing him to lose contact with the man who loaned him the money.

It is alleged Moosawi and Chaloub attended Crazy Kayaks late last month, telling Mr Khov they were there to collect the outstanding money.

Mr Khov promised to have the cash for them in a week, at which time Moosawi allegedly indicated he had a gun down his pants and threatened to "pop" him if he didn't pay up.

Moosawi and Chaloub returned to the store a week later, but Mr Khov said he only had $10,000 for them.

Police allege CCTV footage shows the two men become agitated, prompting Mr Khov's brother to assure them he could get another $10,000 in an hour.

The second cash payment was made an hour later and Moosawi and Chaloub left.

However, it is alleged Chaloub returned by himself a week later and demanded a further $50,000. When Mr Khov refused, Chaloub allegedly said "I'll be back and if you don't have the money I'll shoot you".

Moosawi and Chaloub returned together a week later, with Mr Khov telling police Moosawi again had what appeared to be a gun down his pants.

When Mr Khov said he couldn't pay the money, Moosawi and Chaloub allegedly threatened to shoot him, then shoot his parents.

Meanwhile, police arrived at the scene and arrested the pair.

A cap gun was located at the store's rear door and was seized as an exhibit.

Both men were taken to Lake Illawarra Police Station and charged with two counts of demanding property (in company) with menaces, with intent to steal.

Moosawi admitted to police he'd gone to the store on two occasions but denied threatening Mr Khov.

Both men applied for bail in separate court appearances this week however both were remanded in custody, bail refused.

Their matters will return to court in April.