The rescue of the crumbling Lews Castle in Stornoway is facing a £3.2million shortfall.
Vital repairs to save the castle by converting it into a five star hotel will not proceed unless a massive cash injection is found soon.
Until very recently, the funding gap stood at nearly £4million – the amount needed to build 52 bedrooms and plush self-catering flats in the upper floor of the castle.
Angus Campbell, leader of Western Isles Council said: “We are still trying to finalise funding for the upstairs part of the castle. We have to find extra money.”
Mr Campbell said the funding gap had closed slightly and now stood around £3.2million.
The council – which will put more of its own money into the rescue – is in talks with potential funders.
Mr Campbell said he is “extremely hopeful” all the cash will be found.
Western Isles Council is leading ambitious £18million plans to save the decaying castle which sits in a magnificent grounds overlooking Stornoway.
The category A-listed building is on the Buildings At Risk Register.
Construction on an interlinked museum and heritage centre on the castle site is already well underway.
Adding on a Hebridean history and heritage centre – to host six of the world famous Lewis Chessmen – on the same site upped the fight to attract funding for the castle, built by opium trader and Lewis landlord James Matheson in 1847.
Holiday company Natural Retreats has been confirmed as the operator for the revamped castle though certain conditions are still to be fulfilled before the final lease will be signed.
Cash is in place to upgrade the ground floor foyer, cafe and ballroom, which could host weddings and functions.
Natural Retreats is obliged to invest some of its own money in the project.
The project has been dogged with controversy.
Local accommodation providers are furious with the council for quietly changing the initial proposals for a hotel into a self-catering facility, and the council admits the bigger, outside tourism operator would take trade away from some existing hospitality providers.
But it maintains there would be an overall boost to the wider economy.