Any ways around this hiccup or alternate methods of procuring a loan would be greatly appreciated.

Alternatively, if the property doesn't have an ADU, but the owner would like to add one, it may not require a zoning change, if the property is owner-occupied and they ADU can meet the setback requirements.   

This could be a time to look at alternatives that can be managed by 3rd parties.

I don't like it either, but there is no good alternative.  

@Anthony Robinson you absolutely need to do a bit more due diligence and find some alternative options (try and find at least 2-3 total options), especially if you are going to spend close to $100k.

Potential alternative to hard money. 

Alternatively, the lot seems to be worth about $15K, and he's only asking $10K.

@Jon SchwartzPeople probably said the same thing about the alternative minimum tac (AMT).

It's akin to describing a nuclear reactor as "you put in uranium and electricity comes out - risk-free."

Although a number of people are concerned that SOFR will be more volatile, there will be other indexes that certain banks and institutions use as an alternative index option.Most loan docs over the last 3-5yrs had verbiage related to the potential change, and they gave guidance on what indexes would likely be used, the calculations for the new index, etc.