Bielefeld, who were relegated from the elite ranks last year after coach Ernst Middendorp was ousted from the hot seat and failed to make an immediate return to the top flight, had sought a financial injection of almost five million Euros from the city, but they failed to win a majority vote in favour of the plan yesterday.
That leaves the club, who earlier this week appointed Christian Ziege as their new coach, on the verge of being declared bankrupt.
According to local reports, the club have just a few weeks to find over 10 million Euros to secure them a licence to play in the Second Division next season.
If they are unable to find the funds, the club could fold and be forced to start again from the bottom of the footballing ladder, a situation that the former Kaizer Chiefs minder is unlikely to accept.
Bielefeld's local rivals Gutersloh suffered a similar fate in 1999 when they were wound up with debts of 4.5 million Euros.
Gutersloh are currently still playing in the sixth division of German football.