Craddock-Terry Shoe Corp. in Lynchburg, Va., has reached a tentative agreement with a New York investment firm that wants to buy the 97-year-old shoe manufacturer for $20 a share, officials have announced.

An agreement signed with H. H. Holdings Inc. in New York capped four weeks of negotiations. Craddock-Terry officials said last week the deal should close within two months.

G. Bruce Miller, president of Craddock-Terry, said H. H. Holdings plans to inspect the manufacturer's books. If everything is satisfactory, he said, the sale will be brought before shareholders.

Sources close to the deal said H. H. Holdings would pay a total of $30 million for the company's 1.5 million stock shares and $10 million for debt retirement.

H. H. Holdings' principal investors are Alan Salke, a financial adviser from Van Nuys, Calif., and Sidney Kimmel, chairman of the board of Jones Apparel Group in New York City.

It was not known what effect the sale would have on the 2,300 people employed by Craddock-Terry at plants in seven Virginia cities.

Like countless other shoe firms across the country, Craddock-Terry has felt the sting of a flood of cheap, imported shoes.

In Blackstone, Va., a Craddock-Terry factory was shut down last year, and 250 jobs were lost.

The plant, with a capacity to produce 3,600 pairs of shoes a day, opened amid high hopes in 1970. But it never reached its peak.

By the end of 1983, Craddock-Terry's Blackstone facility was down to 24 percent of capacity.

Miller said the company kept the Blackstone plant operating during most of 1984 despite mounting losses, hoping for some kind of relief from the flood of imported shoes.

"We gambled and lost," he said.

Miller and other domestic shoe company executives wanted President Reagan to protect the industry from imports. But the view from the White House was one of free enterprise -- no government interference.

Three out of four shoes sold in the United States are imports, and the U.S. footwear industry claims it has lost 20,000 jobs and 419 factories since 1970.

Some shoe firms responded by becoming importers themselves. Craddock-Terry is one of them: This year, at least one-tenth of its sales will come from shoes brought in from abroad.