National League chiefs are due to speak to clubs this week on a vote that could cancel out the remainder of this season.
The government has told the league that £ 11million to cover expenses from January to March will be loans, not grants.
An overwhelming majority of the 66 clubs say they will not take loans.
The Department for Digital, Culture, Media and Sports is also due to announce that non-league clubs in stages three to six, below National League level, will have £ 10million in grants.
This will benefit around 850 clubs, none of which have played in two months.
After last season’s dropout, non-elite football in England was halted in November, and then fully suspended on January 4, after the third lockdown in an attempt to tackle the coronavirus pandemic – and a lost second season is expected.
The National League North and South are currently both on hiatus for two weeks, while the National League continues for the time being.
Long-term, low-interest loans will be made available to clubs in stages one and two of the National League, while grant support will also be considered on a case-by-case basis if their imminent future is threatened.
But the number of clubs willing to continue playing despite receiving virtually no income is likely to be so low that continuing the season will not be viable.
The digital, culture, media and sports ministry has previously said claims it reneged on grant funding pledges were “false.”
Officials and clubs have tried to put pressure on the government, but there is no indication that its position will change.
Unless he does, it looks like there will be little choice but to end all three leagues – the National League, the North National League and the South National League – including a well-placed source. claiming that the league is “in shambles”.
At the center of the problem is the divergence between the National League and DCMS versions of a key meeting around the whole issue of funding.
When they agreed to start the season in October, the National League clubs thought that a funding pledge, which started with £ 10million from the national lottery for the period up to the end of December, had to cover the entire season, not just the first third of it.
However, after speaking to many sources about the key conversations that have taken place between government officials and representatives of the National League and the Football Association, BBC Sport understands that neither the words ‘grants’ or ‘loans’ are have been used – and that different interpretations have been put on the term “future funding”.
The National League believed it would be a continuation of the National Lottery deal, with the clubs acting as a promotional vehicle or central grant.
He says the clubs wouldn’t even have started the league if they had known it would involve loans.
DCMS rejects this view and believes the £ 11million on offer fulfills its funding pledge.
It is understood that members of the National League board and FA officials were aware of the impending problem in early December, ahead of the third and final installment of the £ 10million paid to clubs – the format of which has itself is the subject of major controversy and independent scrutiny. by former FA President David Bernstein.
Some of the findings of the review were described as “impractical” by more than one National League official. But Bernstein was furious when the recommendations – especially regarding the money allocation – were ignored and called the review unnecessary.
It was anticipated that funding would be allocated based on the average crowd size. But the National League board decided to change this at an advanced stage, reducing the expected amount received by some clubs by thousands of pounds.
The government reacted with disappointment, although Camelot, the organizer of the national lottery, not being a public company, chose not to intervene.
A number of clubs that have lost significantly have threatened legal action against the National League, which was reportedly set to change the payout allowance in January, having decided not to do so in December on legal notice because Bernstein’s review was published so close to the next payment date.
MP Helen Grant addressed the situation in a statement to MPs Tuesday afternoon, saying the National League’s distribution model was “flawed”, adding that “the botched left many National League clubs in a predicament financial disastrous “.