Investigations into donations made by a Tory peer could result in Bedford Borough Conservatives being told to return thousands of pounds.
The Electoral Commission is currently scrutinising donations made by the Conservative party's deputy leader Lord Ashcroft, through his company Bearwood Corporate Services.
Lord Ashcroft is believed to have given around £5 million nationwide to local Tory groups.
At the last general election, Bedford Borough Conservatives had registered donations of £13,627.75 The Electoral Commission's inquiry into Bearwood is examining claims that the firm does not 'carry on its business in the UK' as demanded by donation regulations.
A Tory insider said: "We are very concerned about this development, as we could be forced to give back some of the money we have received in donations.
"Without these funds our whole borough unitary election campaign could be placed in jeopardy and we may even have to leave our brand new campaign offices in Hassett Street.
"This news could not have come at a worse time, after all the divisions and infighting we have had to endure locally over the past few months.
"It's no wonder people are concerned that we could end up in third place behind the Liberal Democrats at the next General Election.
"The local party is more concerned as to who will become the new leader of the Borough Conservative Group following the June elections, when we should all be working together as a team."
Borough Conservative group leader Cllr Nikki Attenborough (right) said: "The Electoral Commission lays down two criteria for donor companies.
"Firstly they have to be based in the UK and secondly they have to be still trading.
"We are confident that Bearwood meets both those criteria.
"The Electoral Commission is very welcome to the borough Conservatives' assets, which I have worked out to be £27.50 for each member. We were thinking about having a night out on it, if we can find anywhere cheap enough."