Co-owner David Sullivan has vowed the Birmingham board will buy a striker out of their own pockets to off-set the loss of Nicklas Bendtner to injury.
Blues need to find a replacement for Bendtner, who could be sidelined for at least a month with his ankle injury, and Sullivan and chairman David Gold will dip into their own pockets to fund the purchase.
A £2million bid has been made for Luton striker Rowan Vine - also a target for West Brom - but the Hatters are haggling over the fee for the 14-goal player who is understood to be keen to move to St Andrews.
Sullivan said: 'We are £5million overdrawn, in breach of our overdraft limit with the bank. It does my brain in when people say 'where has all the money gone?'. We've spent it.
'There are hidden extras fans don't know about like pay-offs to get rid of players, agents' fees etc. Our gate receipts are way below covering our wages.
'We don't want the club to end up in debt because it would never recover. But at the same time, we are looking to buy players to help the manager and the team.
'We are putting our own money in and we accept that the injury to Nicklas Bendtner means we have to buy a striker - and we will. That's our priority.'
Sullivan added: 'Even if Bendtner is out for only a month, that's like a lifetime at this stage of the season.
'We will try to bring in the best we can get. There is plenty going on behind the scenes. We are doing all we can.'
City are attempting to sign on-loan Arsenal midfielder Sebastian Larsson on a permanent basis for an initial fee of £500,000 which could eventually rise to £1million.
Sullivan said: 'We just can't agree on options on the contract at the moment but Sebastian Larsson he is someone we very much want to bring here.'