Up to 200 people could owe thousands of pounds to two illegal loan sharks operating on the St Giles estate in Lincoln.
The National Illegal Money Lending Team has intelligence about two suspected unlicensed lenders who are charging extortionate interest.
One investigator said: "We have intelligence that there's two potential loan sharks and they could have ten to 100 customers each.
"A typical loan is at least £300 to £500. We worked out the highest APR ever charged by a loan shark was 131,000 per cent. What we don't have in Lincoln is hard evidence because people are afraid of repercussions.
"We need people contact us, which they can do in confidence. All we need is one statement to get a warrant and we do prosecute."
The national team, neighbourhood officers, the CAB, trading standards and Lincolnshire Credit Union, are door-knocking the streets to raise awareness and gather intelligence about loan sharks.
Community caretaker Chris Wells said she is aware of some disturbing cases.
"I know of one case where a mother has taken out loans in the names of relatives and a daughter is getting threatening texts," she said.
"I think with people seeing their benefits sanctioned for signing on time there'll be more people turning to loan sharks. One man I know had his benefits sanctioned for six months. He had had strokes and did not know about the medicals he had to attend.
"People who are losing their benefits are probably not going to go out robbing so where are they going to get money from?"
Mum-of-three Natalie Wood, 22, of Browning Drive, St Giles, said: "I'm not surprised people are using loan sharks because the cost of living is sky-high, but I think people are too frightened to say anything."
Half of the £1,200 cost of a graffiti mural in Swift Gardens is being met with cash seized from convicted loan sharks under the Proceeds of Crime Act.
The artwork depicts why borrowing from loan sharks is a bad idea, while raising the profile of credit unions.