A company that received government funding of almost £5m and promised to train large numbers of apprentices has collapsed, raising questions over the government’s drive to boost apprenticeships.

Bright Future, a software company, was put into liquidation on Wednesday. Some 300 employees — including 180 apprentices — will not receive their pay for January. A government grant and loan of £4.9m given two years ago has yet to be paid back.

Eudie Thompson, the company’s founder and chief executive, said it was hit by falling sales and ran out of cash after less than four years.

The company, founded in 2012 and based in MediaCity in Salford, near the BBC, trained apprentices and deployed them on client projects such as creating apps. The £4.9m from the government’s Regional Growth Fund required it to recruit large numbers.

The Business department said it was filing a claim with the liquidator to recover the money.

Bright Future aimed to compete with low-cost developers in Asia by using apprentices. The minimum wage for those aged 16-18 is £3.30 an hour, far less than qualified software developers. That increased last October from £2.73.

“We were delivering jobs and training people. We needed more sales,” Ms Thompson said. “We then found it difficult to get private funds. The jobs have to be sustainable. It’s sad.”

Accounts show the company lost £69,000 in the year to April 2014, and £245,000 the year before.

Ms Thompson said 85 apprentices had been found new placements while she was working on placing the others. Apprenticeships last one to four years and lead to qualifications.

“The idea underpinning Bright Future was unique, with young people able to gain both an education and hands-on experience in software development, led by experienced mentors,” she added.

It received the apprentices from a contract with The Future’s Bright, a company owned by the same shareholders, Ms Thompson and Robin Ellis.

The Future’s Bright is a subcontractor to Total People that is paid by the Skills Funding Agency (SFA) to deliver education and training. Total People is owned by Manchester College, a further education college.

Ms Thompson said The Future’s Bright continued to trade.

The SFA said it was “working with Total People to put measures in place to ensure that apprentices can continue their training/employment”.

Software companies around Greater Manchester have been offering to take on some of the apprentices amid a skills shortage. On Wednesday UK Fast, the website hosting business, held an open day for them and said it would offer 40-50 apprenticeships.

The government has been keen to promote apprenticeships, which it says offer a chance to earn while you learn and for companies to choose the skills they need.

Some 500,000 people started such schemes in the year to April 2015, with 870,000 apprentices in total.

But this week MPs attacked the government’s “ambitious” target of 3m apprenticeships by 2020. A report by the business and skills select committee said the decision appeared to have been made “with no consideration for what type of training businesses actually require”. It also said there was a temptation to reduce quality to boost quantity.

Business groups such as the CBI have criticised plans for a levy of 0.5 of per cent of payroll costs on large businesses to pay for apprentice training.

Unions have also said many are used as cheap labour.

The National Union of Students last year called for apprentices to receive the national minimum wage. “The minimum wage for apprentices is exploitative and not enough to cover basic living expenses,” it said.