The blaze was reported at about 6.47am with four crews attending the property on High Street, Metheringham.
Josie Cook, works at Cox and Hens hair salon opposite the house that caught fire.
She said the road had been blocked by emergency services tackling the blaze.
She said: “It started earlier on this morning and the road has been shut off so I had to go the other way round to get to work but it looks to be under control now.
“I can’t see how much damage has been done.”
Another business owner along the street said the incident had caused congestion in the village due to the road block but things were settling down.