Businesses have placed banners on verges along the A591 close to the Staveley junction near Kendal, in Cumbria, in a bid to attract trade.
Firms said they had seen a dip in trade since  Storm Desmond in December.
The Lake District National Park Authority has suggested a compromise of a single shared sign.
Michael Tullis, joint-owner of Inglefield Plants, said: "Everybody is struggling. Before I put my sings out our trade was 50% of normal. Since then it's improved, but it's not good.
"I know it is against the law to put these things up, but we've got to try to survive until this is over. I thought when I put them up they would see reason under the circumstances."
South Lakeland MP Tim Farron said businesses in Staveley had faced difficulties since the loss of a bridge which was damaged by the storms.
He has written to the park authority calling for a "common sense approach" and for the village to be treated as a "special case".
The park authority has written to traders informing them the signs contravene national planning regulations, which say adverts must be on the premises to which they relate.
Dave McGowan, from the authority, said: "We have asked a small number of businesses to play by the rules to reduce the clutter at the junction.
"We are really sympathetic to the plight of businesses in the village - there are over 60. You can imagine if all of them had signs what a situation we would have."
He added Cumbria County Council had indicated it would be willing to provide "a single sign or a couple of signs so everybody can benefit from the publicity".
The authority, which can allow such a banner "at its discretion", will meet next week with the parish and county councils to discuss the matter.
Traders in a flood-hit village say they have been threatened with fines of up to £2,500 unless they remove illegal 'open for business' signs.