Parkbay Garden Centre in Paignton is set to close in two months after owner John Britton received an offer for the 2.4ha site, which has planning permission for 100 homes.
He has run the centre since 2006. A neighbouring plot of land, owned by Cavanna Homes, is undergoing highway construction as part of road improvements on Brixham Road ahead of a 220-home development, due to be completed by 2018.
Britton told HW: "We decided to close down on Saturday afternoon. We have planning permission for housing and it would have been a gradual process of closing and rebuilding another garden centre but unfortunately banks are not lending and we looked into private investors but that's too dangerous. So you can blame it on the banks. They're lending to the big boys but not to medium-sized and small companies.
"I'm afraid it is going for housing. It was always going tio be a development site but we were going to use the profits from the houses to build a new garden centre. That was the plan until last week."
He said the nearby roadworks and a poor weather season had not helped so "our only hope is to sell the land".
He said there was several interested parties but the deal had yet to go through.
He added: "It's disappointing because the garden centre industry has lovely people and other garden centres were delighted to help. It's a superb industry."