By Alexander Gladstone and Nora Naughton

Hertz Global Holdings Inc. is in talks to obtain a bankruptcy loan to fund its business reorganization after scrapping a controversial sale of potentially worthless stock, according to people familiar with the matter.

The rental-car company on Wednesday called off a potentially unprecedented sale of up to $500 million in shares, leaving it in need of an alternative source of financing to keep its business afloat through its chapter 11 restructuring. Bankruptcy is expensive, and Hertz was counting on raising capital from speculative day traders that have shown a strong interest in the company despite its financial strain.

Hertz scrapped the planned stock sale after the Securities and Exchange Commission said it had concerns. SEC Chairman Jay Clayton had said on CNBC that regulators expected Hertz to answer additional questions before it started selling shares.

With the stock deal shelved, Hertz is in discussions with a group of top lenders, including a number of hedge funds, to supply a financing package, people familiar with the matter said. This bankruptcy loan could approach $1 billion, the people said.

Hertz declined to comment.

Funding a company's bankruptcy has long been a safe and lucrative business for Wall Street banks and asset managers, earning them high fees and interest rates with minimal risk. For Hertz, financing the bankruptcy case through the sale of stock would have been a preferable and cheaper option.

Hertz's bondholders would also have preferred the company to finance its case through a stock sale rather than a loan because bankruptcy lenders come before bondholders in the repayment line under bankruptcy law.

Prices of Hertz's corporate bonds dropped steadily as the prospects for a stock offering dimmed. The price of the company's 6% bond due in 2028 fell about 23% this week to 36 cents on the dollar, but it is still well above a low of around 10 cents on the dollar touched in May, according to data from MarketAxess.

Hertz filed for bankruptcy protection last month without a deal with creditors and without a bankruptcy loan in place. The company, which has laid off more than 14,000 of its 21,000 employees, said in court papers it had enough cash -- more than $850 million -- to fund operations at least through the initial stage of the chapter 11 process.

The length of the initial stage wasn't clear and Hertz is facing a complex restructuring given its Byzantine organizational structure and sizable debt load, which includes $14.7 billion in asset-backed debt of subsidiaries not included in the chapter 11 filing.

Despite those challenges, Hertz said last week it would ask the public to buy stock, even though bankruptcies typically wipe out shareholders, who are at the back of the payment line in bankruptcy.

Hertz shares have gone on a gravity-defying rally since the company's bankruptcy filing, retaining value even though its bonds continue to trade at distressed levels, indicating little faith among creditors they can be fully repaid with money left over for shareholders.

The company filed for bankruptcy last month after longstanding debt problems became magnified by the coronavirus pandemic and the resulting economic recession.

A series of strategic missteps, competition from ride-hailing giants including Uber Technologies Inc. and Lyft Inc., and a revolving door of chief executives left Hertz a step behind its competitors for the better part of a decade. The economic fallout from the coronavirus pandemic left the company in a cash crunch as people world-wide refrained from traveling and demand for Hertz's rental business dried up.

"The stock sale was done opportunistically, and now we're back to the normal course of operations in terms of the bankruptcy process," said Chris Woronka, an analyst for Deutsche Bank. "Even though the stock sale filing was an interesting development, it really doesn't change the overall trajectory of the process."

Hertz now needs cash, among other things to pay the army of lawyers and bankers advising the company on its bankruptcy case. For example, the company hired law firm White & Case LLP -- where top partners charge more than $1,600 an hour -- to shepherd it through bankruptcy.

Hertz bondholders with rights to the vehicle fleet have to wait 60 days before they can foreclose on and sell the cars. The 60-day clock started ticking on May 22, when Hertz sought chapter 11 protection. But if the used-car market is still largely frozen over the summer, the creditors could have more of an incentive to make a deal with the company.

--Matt Wirz contributed to this article.

Write to Alexander Gladstone at alexander.gladstone@wsj.com