Northampton Town Football Club has been given three weeks to pay back more than £10m to the borough council.
Northampton Borough Council said it has asked for the money back as the club has missed two repayments, as revealed by the Chronicle and Echo.
The council said it had been promised repayment when the club is sold but said the sale “does not seem to be proceeding”.
Northampton Town chairman David Cardoza said he intends to repay the debt.
A council spokesman said legal notices have been issued to the club requiring the repayment of £10.25m.
If the sum is not repaid in full in three weeks the council will begin legal proceedings to recover the debt.
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The council claims the last two repayments have been missed and it is not confident in the club’s ability to repay the loan.
A spokesman said: “This step was not taken lightly, but is the proper process to protect the public purse and collect the debt in these circumstances.
“We continue to support the club and remain open to discussion on ways to deal with the debt owing.”
The club, nicknamed The Cobblers, is in the process of being taken over by an Indian consortium.
Chairman Cardoza said talks regarding the takeover were “taking longer than anyone would have hoped” but said they were progressing.
He said: “We completely understand the urgency to bring matters to a conclusion and it is our intention to have the debt repaid.”
The loan was originally given to the club for the re-development of its Sixfields stadium.
It was to be used to build the new East Stand, along with a hotel and conference centre, none of which have been completed.