Weldon Plant in Corby said its overdraft with Royal Bank of Scotland was cut from £3.15m to £2.2m “without justification”.

Weldon’s chairman, Peter Webb told the BBC: “This decision has not been taken lightly. We know how many individuals and families will be affected.”

RBS said it was working with the firm to resolve the issue.

A bank spokesperson said: “We are making a sustained effort to work with Weldon Plant Ltd to address its current issues.”

The MP for Corby and East Northamptonshire, Louise Bagshawe, has written on behalf of Weldon to RBS.

She asked why a state-owned bank was not lending to a “chiefly successful business”.

She said in the letter: “We are at a crucial stage of the recovery in the UK economy, and we cannot afford to rush the closure of companies such as Weldon Ltd, which employs significant numbers, and delivers untold benefits to the local economy and community.”

The firm’s workers were called off site at a housing scheme in Lincoln Way, the Rockingham Triangle stadium and street works at Oakley Vale in Corby this week.

Officers at Corby Council spent yesterday considering how best to help the company and its various subcontractors.

Chief executive of Corby Council Chris Mallender said: “This is a dreadfully worrying time for Weldon Plant, its employees and its many subcontractors.

“We believe it is an inherently strong business that was recovering well from recession but is now jeopardised by what appears to be irresponsible bank lending practices from a publicly-owned bank.

“This is not the first time a business with significant public work contracts appears to have been forced to the brink of closure.”