At least six Football League clubs have begun negotiating with a City-based investment fund in the hope of borrowing money in the close season. The majority are believed to come from the Coca-Cola Championship, including Southampton, who were relegated to League One on Saturday and whose holding company is in administration.

The managers of Hero Global Football Fund, which is in the process of raising money from investors and will not begin lending until May 31, confirmed yesterday that they have been contacted by a number of clubs seeking cash injections in the fragile economic climate.

Hero was set up last year by Nick Hely-Hutchinson and Damian Roberts, City fund managers, to invest in football without taking equity in clubs. Backed by Emirates Bank, Hero plans to raise up to £100 million in its inaugural football-based fund, based on minimum subscriptions of £100,000 and will make funds available to clubs linked to buying and selling players. The finance will be secured across the squad rather than against an individual player’s value.

“There’s been a large amount of interest around the league,” Roberts said. “A lot of clubs are looking for capital to finance buying new players or keeping their squad together.”

An executive board of Alan Hansen, the pundit, David Elleray, the retired referee, and David Davies, the former chief executive of the FA, are on hand to advise about football matters but the fund managers are keen to play down concerns that Hero could influence decisions in the transfer market.

“The club decides what to do with the money,” Hely-Hutchinson said. “We have no say in their buying and selling. There is no third-party ownership. Any players bought with our funding belong to the club and the club makes all the decisions. That’s why we need to be certain that the business is being run the right way.”

Keith Harris, the former chairman of the Football League and chairman of Seymour Pierce investment bank, believes that more clubs will turn to Hero for funds. “Banks are becoming unwilling to lend to football clubs and even when they do it is short term and very expensive,” Harris said. “In contrast, Hero’s player finance is secured across a squad, giving solid security to the lender with the flexibility that individual players can leave and be replaced.

“A fund like this has long-term money from its investors so it can offer long-term funds to clubs.”

Hero will invest 20 per cent of its fund in developing youth programmes and has made a cash injection to the Glenn Hoddle Academy.