Lighting manufacturer Tradelight, based in a temporary building in Gallamore Lane, wants to erect a large, purpose-built unit nearby and is in talks to buy an area of land.
The company has applied for planning permission for nine starter-homes to be built on its Oxford Street site - and hopes to raise funds for its new factory by selling this land to a developer.
But Tradelight director Roy Goodyear said West Lindsey District Council’s planning department is making things very difficult.
He said one of the reasons Tradelight pulled out of Oxford Street was because their lorries and large amount of deliveries regularly caused traffic problems - and he wanted to rectify this.
Now Mr Goodyear is furious after claiming WLDC told him they had concerns about the proposed new homes causing traffic issues.
He said: “It’s a ridiculous situation as far as we’re concerned.
“The fact is we’re reducing the traffic quite considerably.
“How can you argue the sense that says ‘we’re concerned about traffic’?
“It meets all of the criteria. We’re very very committed to Market Rasen.
“The business is growing at a fairly phenomenal rate.
“But if this continues for much longer I will move 24 jobs from Market Rasen – I’ve got a business to run.
“It’s just becoming a nightmare for everyone.”
Tradelight, which has a head office in Nottingham, has many big-name clients including Birds Eye, McCain and Dixons.
It currently employs 12 members of staff but plans to create a further 12 jobs as part of its expansion.
Mr Goodyear said: “The guys in Nottingham are saying just leave Market Rasen and come here if we can’t get some sense to move forward.
“But we chose Market Rasen, quite simply from my perspective, it’s a good place, it’s a small market town, it needs some injection of revenue streams.
“I intend to make a final decision within the next two or three weeks - because of the growth of the business I need to move it on one way or another.”
A WLDC spokesman said: “An application has been submitted for the demolition of the existing showroom, offices and warehouse and erection of nine dwellings with associated access road and parking on the site.
“The application is under consideration and negotiations have been taking place with the applicant to ensure an appropriate solution is considered on the site. No decision has been made on this application at this stage.”