More than 60 firms based along Bilston Road, Wolverhampton, saw profits tumble during six months of work to replace tram tracks on a mile and a half stretch from the city centre.
At least four businesses went bust during the works in 2017, which caused traffic chaos as roads were blocked off and diversions put in place.
Traders have demanded compensation over the works, which were carried out by the Midlands Metro Alliance, and put forward their cases at a 'working group' meeting with West Midlands Combined Authority (WMCA) representatives last week.
They were told to expect a response by the end of March, but bosses at the region's super council have told the Express & Star there is zero chance of them receiving a payout – claiming it is not allowed under Government legislation.
The decision has been slammed by Wolverhampton South East MP Pat McFadden, who said: "This is an appalling decision.
"The traders went through a terrible time during the works, and a few went bust. The very least the combined authority can do is to offer some compensation to affected businesses.
"I have been in touch with traders throughout, and they were hopeful that last week's meeting would result in some kind of compensation offer. I believe that they will understandably be angry at this outcome."
WMCA spokesman Alistair Harris said the purpose of the working group was to use traders experiences to help with potential improvements for future schemes.
He said: “The Metro-enabling legislation approved by the UK Government sets out the circumstances under which compensation is available during the initial construction of a tram network – but the legislation does not include compensation for loss of trade during maintenance works, such as those carried out in Bilston Road.
“Businesses were advised by Wolverhampton Council on how to apply for rate relief from the Valuation Office, and for Hardship Relief directly by supplying evidence of the impact of the maintenance work on their trade.
“The Midlands Metro Alliance also supported traders by providing additional signage, banners and tailored social media marketing plans.
“The combined authority has set up a working group to look at this scheme, and the group invited businesses to come in and discuss the impact of the work and help assess the need for any improvements in the way road closures and maintenance works are communicated during future schemes.”
Traders were ordered by WMCA bosses not to reveal details of last week's meeting.