The major insurance company that developer Oliver T. Carr Jr. had counted on to finance the long-delayed renovation of the Willard Hotel has decided against making the loan because of inflation and uncertainties in the economy.

Carr nonetheless intends to move forward with the $90-million project, using short-term loans from local banks to finance construction until he can arrange for permanent financing at a later date, according to a source familiar with Carr's organization and downtown development.

But the plan to transform the dilapidated Willard to a luxury hotel and to build an adjoining office building is proving to be more difficult and complicated than anticipated when Carr wrested control of the project last month from Florida developer Stuart Golding and the Fairmont Hotel Corp. of San Francisco.

"At first, they the Carr firm thought it was a fait accompli," the source said. "But it wasn't as easy as it seemed."

Carr asked the Pennsylvania Avenue Development Corporation (PADC) this week for more time to revise the construction plans, rewrite the lease agreement, and put together a financial package. He had been scheduled to present that material to PADC directors on Wednesday, but the meeting was delayed until Dec. 2 at Carr's request.

Carr flew to San Francisco for a meeting yesterday with Golding and officials of the Fairmont Hotel Corp., to try to iron out differences on how best to proceed with the project.

Golding and Fairmont reluctantly turned to Carr for help in salvaging the project after encountering difficulty securing financing for their proposal and being threatened with the loss of an exclusive lease agreement with the PADC to renovate and operate the hotel, located on the northwest corner of 14th Street and Pennsylvania Avenue.

With the official blessing of the PADC, the federal agency charged with directing renovations along the avenue, Carr, who had boasted of his ability to secure financing, became a managing partner of the project on Oct. 4. His primary responsibility was to redesign the project and make it more feasible to market to potential financiers.

Carr, who has pushed since 1978 to win control of the project, promised to arrange long-term financing through the Equitable Life Assurance Society of the United States by Dec. 4, begin site preparation next spring, and have the project completed by 1984.

Equitable, the nation's third largest insurance company, has financed many of the shopping centers and office buildings errected by Carr since 1964. Carr said last month that Equitable was "very interested" in participating in the Willard project, although he added that, "Their specific commitment is not now available."

Yesterday, Gordon Clagett, vice president for real estate investment at Equitable's headquarters in New York, said his firm isn't willing to move forward on the Willard because of economic conditions that discourage long-term commitments of funds.

"Without a doubt, Equitable considers Washington to be one of our prime investment cities in the country, and the Willard is one of the best sites in the city for development," Clagett said. "It bothers me personally. It's something I wish we could jump on."

Since December 1978, when Golding was chosen to develop the project, Carr has contended that Golding's plan for rehabilitating the old hotel and using the land around it was not financially feasible because it devoted too much space to hotel rooms.

Golding originally proposed constructing 600 luxury hotel rooms and about 40,000 square feet of retail space. Under the revised plan, the hotel will contain only 350 rooms, while a new office building would be constructed next door.

The project would contain about 60,000 square feet of retail space and 200,000 square feet of office space. The exterior of the office buildings will mirror the Willard's beaux arts architecture.