The loan from Jim Moffat, the founder of the AT Mays travel agent chain who died last year, helped to bankroll the party's general election campaign in 1997.
The party treasurers, chaired by the multi-millionaire Michael Ashcroft, will almost certainly have to dip into their own pockets to pay back the money.
They have been helping to bankroll the party's activities since the general election as recruitment has faltered and constituents have displayed a reluctance to pay their dues.
The Conservatives' last accounts showed a pounds 3.8m deficit in March 1998, and the party had to pay pounds 11m in loans, taxes and other liabilities during the next year. The party raised a total of pounds 8m in "free" loans before the election, the accounts show, but much of the money was converted into donations afterwards.
The news that a substantial part of the 1997 campaign was funded by Mr Moffat would have been kept secret had it not been mentioned in his pounds 7m will.
Yesterday his son, Jamie Moffat, said that his father had supported many causes.
"He was asked to help so he agreed to help. He helped all manner of different organisations, and it wasn't as if he had any particular allegiance to any of them.
"If he felt it was right, he would do it," he said.
Mr Moffat added that there had been no interest payments attached to the loan, and that it was due to be redeemed in one installation before the end of 1999.
Mr Moffat founded the AT Mays chain in Saltcoats, Scotland in the Sixties and built it into one of the UK's biggest travel agents, with 300 branches. He retired in 1990.
The Labour Party said last night that the revelation unveiled a wider pattern of interest-free loans given to the Conservatives and later turned into donations.
Under Lord Neill's proposals on political funding, all political loans would have to be declared by the parties, as would donations.
The Conservatives now declare donations over pounds 5,000 but have only done so since the 1997 general election.
A Labour spokesman said the Conservatives had been guilty of "underhand" fund-raising methods.
"For years the Tories have used loans as a way of disguising donations. Now they are going to pay the price for such shenanigans," he said.
Conservative Central Office could not contact the relevant officials for comment last night.Reuse content