The Confederation of Passenger Transport (CPT), which represents operators, said it believed £40 million of support to help them cover lost revenue this year following the Covid pandemic would end at the end of July, earlier than expected.
The axing of the Network Support Grant Plus would come despite passenger numbers remaining 25 per cent below pre-Covid levels.
One bus firm said it could lead to evening, Sunday or even entire routes being scrapped.
Another industry source said operators might also be forced to raise fares.
Transport Scotland is understood to have accepted that its funding is keeping many marginal bus services running, and ending it would be likely to trigger “sharp cuts”, particularly in rural areas and islands.
First Bus, one of Scotland’s biggest operators, has told the Scottish Government agency it might need to cut services by 20 per cent and close some depots.
CPT said it hoped any service reductions would not be as severe as ScotRail axing one third of its timetable because of the drivers’ dispute.
But it said even a much smaller cut would hit more travellers as buses carry more than three times as many people as trains.
CPT Scotland director Paul White said: “We have witnessed the huge disruption caused by ScotRail’s service cuts.
"While I would hope any reductions in the bus network would not be to that scale, it is worth noting that bus accounts for three quarters of all public transport trips.
"A smaller percentage of bus cuts could still result in many more people being affected.
“Bus operators are focused on maintaining the bus network and encouraging people back onto bus.
"Driver shortages, rising costs and the winding down of government support that mitigates the impact of Covid all make this increasingly difficult.
"If these barriers to operation remain unresolved as government support ends, then I am concerned about potential service reductions.
"My hope remains that government finds a way to support the bus network from the impact of Covid, as it does rail, until the autumn when we will potentially see a greater bounce back of passengers as universities and commuters return, and we can focus once more on growing public transport use rather than losing passengers to service reductions that we may never win back.”
One industry source said: “I don't want to scaremonger but I have legitimate concerns we're trying to meet a series of policy aims around modal shift [cutting car use] and decarbonisation while we potentially see both bus and rail struggling due to the impact of Covid, driver shortages and a lack of national support. We're destined to fail.
“We’ll do all we can to minimise fares increases and service cuts as our aim remains to get people on buses.”
Ralph Roberts, chief executive of the Greenock-based McGill's Group, said: “Whilst footfall at McGill’s is recovering well, we are still 25 per cent short of covering our operating costs.
"As government support that replaces that missing income comes to an end in July, we are looking closely at how we can adjust our networks in a way that minimises disruption yet balances the books.”
Sharon Morrison, communications director of West Coast Motors, said: “Like many industries we are experiencing a shortage of labour and are limited in what we can operate.
“If the shortage continues and we lose the welcomed and much-needed support from the Scottish Government, we would be unlikely to increase our services and encourage more people, especially those under 22 now eligible for free bus travel, to get back on [the] bus.
"It would also exacerbate the financial pressures on local authority supported services, particularly in our rural communities.”
Transport Scotland said it was unable to confirm the funding would end next month.
A spokesperson said: “The Scottish Government has provided up to £210m to support bus services during the pandemic and £40m in additional funding to support recovery this year.
"As we continue to navigate our way through and out of the pandemic, it is important the support we give transport operators evolves to make sure it remains fit for purpose and represents value for money.
“We continue to engage with operators and local government to keep patronage, service levels and funding under review.
“Passenger numbers have been increasing since Covid restrictions eased earlier this year and we want more people to choose to travel by bus now and in the future.”