The investment firm which hopes to buy Tata's Scunthorpe steelworks in the coming days is considering pressing ahead without a £100m Government loan offered by ministers.
Sky News understands that Greybull Capital is examining the possibility of structuring its takeover of the plant - which employs around 4000 people - using funding only from private sector sources.
A club of lenders was close to being finalised by Greybull and its advisers this weekend, according to insiders.
Sources close to the talks insisted that there was still an expectation that the Government would be "involved" in the deal, but refused to say whether that would include direct financial assistance.
There had been growing speculation in recent weeks that taxpayers would provide a loan - drafted on commercial terms to avoid breaching European Union rules on state aid.
If Greybull does press ahead without a Government loan, it could benefit both parties given the extent of taxpayer support which may be required by the rest of the steel industry.
Tata Steel's Scunthorpe site, acquired as part of the Indian company's takeover of Corus in 2007, makes long products such as rails and beams for the construction industry.
Both Tata Steel and Greybull are said to have become frustrated at the Government's involvement involved in the talks.
One source complaining that Whitehall officials had been "disengaged" until the true scale of the crisis facing the UK steel industry became apparent this week.
The Indian-owned Tata Steel said it would pursue a rapid auction of its UK operations, including at Port Talbot in Wales, where workers quizzed the under-fire Business Secretary, Sajid Javid, on Friday.
KPMG, the accountancy firm which has been advising Tata Steel on the Scunthorpe deal, is understood to have been handed a role to find a buyer for the rest of the business.
The Government said it would also appoint an independent adviser to guide it through the auction, although with Tata Steel's UK business losing more than £1m-a-day, there is deep scepticism that a buyer will be found.
Criticism of ministers' handling of the crisis deepened on Friday when it emerged that China would impose steep tariffs on imports of some EU steel products - including a number manufactured at Port Talbot - just hours after David Cameron said he had raised the issue of Chinese steel-dumping with the country's president.
Greybull's deal to buy the Scunthorpe steelworks is likely to lead to workers taking a 3% cut in basic pay during the first year under the new owners.
The 4000 workers based at Scunthorpe would be transferred from the old British Steel final salary pension scheme to a less generous defined contribution scheme.
The Government said it would also appoint an independent adviser to guide it through the auction, although with Tata Steel's UK business losing more than £1m-a-day, there is deep scepticism that a buyer will be found.
Criticism of ministers' handling of the crisis deepened on Friday when it emerged that China would impose steep tariffs on imports of some EU steel products - including a number manufactured at Port Talbot - just hours after David Cameron said he had raised the issue of Chinese steel-dumping with the country's president.
Greybull's deal to buy the Scunthorpe steelworks is likely to lead to workers taking a 3% cut in basic pay during the first year under the new owners.
The 4000 workers based at Scunthorpe would be transferred from the old British Steel final salary pension scheme to a less generous defined contribution scheme.
An initial deadline of announcing the Greybull deal by the end of March has already been missed, although it could be signed in the next few days.
Thousands of jobs have already disappeared at key steel-making sites across the UK amid a glut of cheap steel flooding global markets and high energy costs.
A substantial deficit in Tata Steel's UK pension fund is a major obstacle to any deal being agreed to keep the rest of its British business going, with the Pension Protection Fund, a state lifeboat, expected to have to step in.
Greybull declined to comment.
