Two schools in the West Country have been issued with termination notices by the government after being put into special measures by Ofsted.
In January the Steiner Academy Frome and the Steiner Academy Bristol both received the lowest Ofsted rating by inspectors.
The Bristol school is mounting a legal challenge against the rating.
Both schools have until 20 February to hand over an action plan for improvement to the government.
The Department for Education has advised the schools to convert to a multi-academy trust and said it would help them each find a sponsor.
Once this happens, funding from the Department for Education will terminate as they will convert from free school status to being part of a multi-academy trust. This process is expected to take several months.
If no action plan is made or a sponsor is not found both schools will close.
The letter from the Department for Education to both schools highlighted areas of concern from Ofsted inspectors.
Concerns about the Steiner Academy Frome included safeguarding, governors not holding senior leaders to account and insufficient progress for pupils with special educational needs and disabilities (SEND).
Safeguarding of pupils, lack of progress of SEND pupils and bullying were some of the concerns at Steiner Academy Bristol.
Steiner schools state they have an ethos of education taking account of the academic, physical, emotional and spiritual needs of the child.
Principal of Steiner Academy Bristol Joss Hayes said, "External partners have already confirmed that safeguarding is effective at the school.
"We are committed to making improvements and have started implementing a number of new learning programmes."
Governor Roy Douglas said: "Our parents remain unfailingly supportive of our school and its ethos.
"We intend to challenge the Ofsted judgement in the courts."
The BBC has approached the Steiner Academy Frome for comment.