A community-led takeover of St Mirren is still on but the group has lost a significant amount of its funding.
Board member Richard Atkinson, who is heading the Community Interest Company (CIC) bid, said: "We've lost approximately one third of the funding.
"We still want to try and use a CIC and the involvement of the fans and the community to purchase the club.
"It's a large part of the funding. It was a key part of the proposition and it's not come through."
St Mirren chairman Stewart Gilmour is disappointed by the news but remains hopeful that the bid can be revived.
"We have come a long way," Gilmour told BBC Scotland. "We've cleared our debt and built a new stadium and training ground. It's a good platform to build on.
"I really think the community approach works for a club the size of St Mirren.
"We have vowed to do everything we can to ensure the right people are in control and we are not in a race out of the door."
Gilmour also confirmed that director Ken McGeoch is leading a rival group interested in taking over the running of the Paisley club.
Supporters and others interested in the CIC project will have a public meeting this week to assess the future of the bid.
"The only thing that is off is that one of the funders, unfortunatley after we've gone through the process, has come back to us with a negative in terms of contributing their money to the pot," Atkinson told BBC Scotland.
"But the other funders are still engaged in the process. There are still the 800-odd recipients and respondents to our offer engaged and hopefully we'll be able to establish just how engaged those community members and fans still are.
"If they are then I believe there is still a way in-which we can see the supporter-base take control of the governance and the community take control of the ownership of the club in the long term.
"We set ambitious targets, we haven't been able to fulfil them. We have to hold our hands up and say, 'it's taken longer than we thought it would'."
Falling revenues and an economic downturn have contributed to many clubs slipping further into debt and Scottish football in general is struggling to find investment.
But the Buddies are a rarity in that they have no debt even though they have moved to a new stadium and built a new training facility in recent years.
"No-one has tried to do what we were trying to do, which is using a fans group to take control of a successful football club that is debt-free, [with] new facilities and up for sale," Atkinson said.
"Normally the fans unfortunately don't get the opportunity to take part in owning their club until disaster is near striking in the case of most football clubs that end up being owned by the fans.
"What makes folk buy football clubs? It's a passion for the club.
"It is not the world's most sensible idea for an individual to come along, borrow money, buy a club, take money out the club to pay the debt and then end up owning the club. I don't think that's an acceptable approach.
"Football needs to return to its roots, which is by being owned by a broad cross-section of the fan-base and the community.
"I think it's the only thing that's sustainable, it's the only thing that guarantees not just sustainability for the next 10 years but for the next 50 years, the next 100 years of a football club's existence."
Gilmour put the club up for sale over two years ago and Atkinson remains convinced a community model represents St Mirren's best chance of prospering.
"I still believe it's the right thing for the fans and the community to own and govern the club," he added.
"We're working as hard as we can and going as fast as we can. If we're successful, we're successful. If somebody else comes along, makes an offer that's acceptable to those that are selling it, that might be what happens.
"But we're still here, we still believe it's the way forward.
"We hope that an engagement in the next week or two with the fan-base again through a public meeting to garner their support that they still believe it's the right thing to do and if it is then we'll carry on with supporter governance and community ownership, that's the plan."