British Steel is seeking an emergency £100m loan from the government after being frozen out of an EU-wide carbon trading scheme due to the UK's failure to secure a Brexit deal.
The UK's second-biggest steel producer is in talks about securing the funding within the next few weeks, according to Sky News.
Ministers have called upon KPMG to advise them on the discussions, the report claims, while business secretary Greg Clark has been informed about the situation.
The EU's decision not to give UK companies permits under its carbon emissions trading system has left British Steel with a cash-flow shortfall.
The firm, which employs around 5000 people in the UK, is understood to be unable to pay for the current round of carbon credits, having already used last year's permits to pay for working capital requirements.
Companies can use their allocation of permits to pay for the previous year's emissions, of which British Steel account for roughly five per cent of the £2bn total.
The six-month delay to Brexit has made things worse for the firm, leaving them in limbo for longer with the EU continuing to freeze them out of the emission trading system.
British Steel has approached officials from the department of business, energy and industrial strategy about a short-term commercial loan, but other options are still being considered.
A spokesman for the company said: “Our successful turnaround is continuing. We’re pleased with the significant progress we have made over the past three years and the support we have enjoyed from our workforce, customers, suppliers and investors. We are now also examining a number of growth opportunities.
“Brexit is presenting a range of challenges to every British company and we are not immune. We are discussing the impact of Brexit on our business with ministers and officials from the Department for Business, Energy and Industrial Strategy and they have been extremely responsive and supportive to date.”