SCF owes 20,000 investors about $1.7 billion, and was believed to be running out of cash to pay investors and meet statutory requirements.
It needs a new backer or a cash injection from the Government to avoid receivership.
The $1.7b debentures are covered by the government retail deposit guarantee scheme which means those investors would be paid out by the Government if South Canterbury failed.
The Government has midnight deadline if it has to put up cash to save the company.
Finance Minister Bill English was expected to brief Cabinet this afternoon about the situation.
Mr Key this morning assured anyone with debentures in the ailing company that their money was safe.
The Government had provisioned $900 million as a potential loss to the finance company sector and South Canterbury had some assets.
"No one can argue the tax payer hasn't stepped up," Mr Key said.
The Government also wanted to minimise any loss incurred by the Crown, he said.
"If mum and dad have their money in then mum and dad will get their money back, in terms of what happens from there...I'm not going to comment on that today."
SCF chief executive Sandy Maier is playing down speculation the beleaguered company is looking for a taxpayer funded rescue plan.
"It's a very long stretch to say ... that represents some kind of capital contribution or bail out or whatever, or that we're negotiating with Treasury for cash contributions or so on," Mr Maier told Radio New Zealand.
"At present there isn't anything like that going on. The only live discussion at the moment is with private sector parties, and taking cognisance of the (retail deposit) guarantee."
Mr Key was likely to make an announcement at his weekly post-Cabinet press conference late this afternoon.
SCF president for life. and chairman until March, Alan Hubbard said there was a deal on the table to help the firm but it would need government money too.
One of Mr Hubbard's other companies, Hubbard Management Funds, seven charitable trusts, Mr Hubbard himself and his wife, have been put under statutory management.
About 300 investors in Hubbard Management Funds have been told the company overstated its value by at least 25 percent on March 31, reporting non-existent investments and cash balances.
Mr Hubbard disputes the figures.
Labour's commerce spokeswoman Lianne Dalziel said the Government has refused to answer her questions about its intentions over the retail guarantee scheme.
Mr Maier had said SCF was in talks with about five prospective investors, Radio New Zealand reported.
SCF has been searching for a new major shareholder and it has waivers from breaches to its trust deed until tomorrow.
SCF is not affected by the statutory management of Mr Hubbard's affairs.
On Friday the NZX placed a trading halt on securities of SCF, at the company's request. The halt was put in place pending a material announcement by the company.
