An award-winning shop is being forced to put its dreams of expansion on hold because banks won’t lend it any money.

Local Roots and Wellie Boots, based in Eastbourne, has just been named local retailer of the year in the 2010 Observer Ethical Awards – pipping Brighton’s Infinity Foods to the title.

The shop sells fresh produce supplied by farms in Sussex.

It has been a huge success in its first two years in business – with annual turnover growing from £77,000 to almost double that in the past financial year.

Despite this, owner Luke Randall says he is struggling to pay the bills and his dream of opening a second store looks unlikely.

He has also incurred more than £3,000 in bank charges.

Mr Randall, who runs the shop with his wife Beverley, said: “We can’t get any finance at all. We feel the business would work in Brighton but at the moment we’re just trying to survive.”

Although there is pressure on high street banks to lend to small businesses – especially asmany of the banks are now mostly stateowned – they are often reluctant to support the catering and retail sectors as they are seen to be most exposed to the economic slump.

Research published last week by the Federation of Small Businesses (FSB) showed one million small business owners are unsatisfied with their bank managers.

Most are unhappy they are not based locally and are unable to treat business cases individually.

Ann Swain, chairman of the Crawley, Horsham and Mid Sussex branch of the FSB, said: “On average, the firms surveyed had held their account at the same bank for almost 15 years.

“When they first started banking, the manager would have known their name and the business and would have made account decisions, instead of a centrally based computer like now.”

Local Roots opened just as the credit crunch hit and bank lending dried up. As a result the Randalls had to remortgage their house to set up the business.

Mr Randall said he understood the bank’s reluctance to lend back then as his business was untested.

He said: “Cash flow is a real issue. When you buy in more stock all it takes is a quiet week to lose thousands of pounds.

“We brought in five members of staff but had to let them go.”

He plans to appeal for a private investor and will explore Invoice Finance, where firms can raise cash against their sales ledger.

Although they are not expanding, Mrs Randall said they are now offering weekly veg box deliveries to households in Brighton, Lewes and surrounding communities.

For more information, email local.roots@hotmail.com or call 01323 412328.