British Steel has staved off the threat of collapse, despite the government refusing its request to participate in a bailout, after the firm’s owners and lenders agreed to provide fresh funds.

The deal, reached after talks at the Department for Business, Energy and Industrial Strategy (BEIS), secures the immediate future of 4,500 staff, most of whom work at the company’s Scunthorpe steelworks, one of the last two blast furnace steelworks left in the UK.

British Steel said on Tuesday it had run into difficulties as a result of the government’s failure to strike a Brexit deal. Business from customers in the EU had “dried up” owing to the lack of clarity around tariffs on steel exports.

Lenders to British Steel had indicated they would have no choice but to consider an administration unless the government was willing to top up a £120m loan it made to the company this month.

A short-term agreement is now understood to have been reached that does not involve any fresh government input.

British Steel’s private equity owner, Greybull Capital, and its bank lenders are still understood to feel that the government must either agree a Brexit deal that dispels the cloud of uncertainty hanging over the business, or contribute some cash soon.

In a statement, British Steel said: “As the business navigates the significant uncertainties caused by Brexit and explores options to strengthen the business for the long term, we are pleased to confirm that we have the required liquidity while we work towards a permanent solution.

“We are grateful for the support that our stakeholders and the British government have provided to date. British Steel has the backing of its key stakeholders, including shareholders and lenders, and operations continue as normal.”

A spokesperson for BEIS said: “As the business department, we are in regular conversation with a wide range of companies.”

In an email to staff this week, British Steel’s chief executive, Gerald Reichmann, said the impact of Brexit uncertainty was not the only problem facing the company. He highlighted increasing raw material prices and weak market demand, as well as the weakness of sterling, which has fallen against a basket of currencies since the EU referendum.

Reichmann urged staff not to be distracted by discussions about the company’s future. “I understand some employees have raised concerns around pay – at present the plan is to pay all British Steel Limited employees as normal at the end of May 2019,” Reichmann said in the email, which was sent before the funding deal was reached. “I appreciate that this is a worrying time for all affected. Try to support each other.”

Despite its cash crisis, British Steel committed itself this month to spending more than £40m on buying a steelworks in Ascoval, France, in a deal partly funded by the French government.

A spokesperson for the steelworkers’ trade union Community said: “The workforce at British Steel will rightly be asking what the owners are doing spending millions on a new facility in France while the future of their steelmaking operations in the UK hangs in the balance.

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“British Steel executives have already talked enthusiastically about the potential to divert some supply from Scunthorpe to Ascoval to feed their French rail mill. Greybull need to front up and explain exactly what Ascoval means for the UK operations and they need to honour their moral and social responsibilities to the thousands of steelworkers and their families in the UK who are worried for their futures.”

This week the Guardian revealed that Greybull was charging £20m a year in loan interest and management fees from British Steel.

Greybull, which bought the company for £1 in 2016 when the Indian conglomerate Tata walked away from it, defended the scale of its income from British Steel. It said high-interest loans to British Steel, charged at 9.6%, reflected the risk of lending money to it, while its management fees were at a discount to market rates.

• This article was amended on 17 May 2019. An earlier version referred to Scunthorpe as “one of the last two steelworks left in the UK”. We have added “blast furnace” to that description.