Horncastle could run out of burial plots in two years as town councillors tackle the financial implications of providing a new cemetery.
The council is pressing ahead with plans for the new cemetery in an area of community woodland at the junction of Boston Road and the B1183 to Revesby.
It is understood the final cost of the project could possibly top £150,000.
Councillors have agreed to use their own capital reserves (£111,000) to cover the majority of the bills.
They are looking to take out a loan to pay for any shortfall between that figure and the final cost.
At their monthly meeting last Tuesday, councillors rejected any suggestion of increasing their share of council tax bills to pay for the project.
Town clerk Amanda Bushell said it would be ‘unfair’ to put the entire financial burden on residents.
She added councils can apply for loans at very low rates of interest over periods of up to 50 years.
She stressed any repayments would be partly offset by income generated from the new cemetery.
Councillors were told it was impossible to estimate the final cost of the project.
Mrs Bushell said costs had already amounted to £70,000 - without adding in a new car park, storage buildings, an access road and toilets.
The site is owned by Lincolnshire County Council.
Town councillors were told they would have to cover their own legal costs - and the county council’s.
There are other costs involved, including felling and planting trees.
Gates will also have to be installed to make the site more secure.
A planning application will be submitted to East Lindsey District Council as soon as possible.
Mrs Bushell confirmed that at current rates, the existing Boston Road cemetery would run out of plots in two years.
She said: “Quite a few people have already reserved plots so it is difficult to estimate exactly when we will run out of places.”
The council has no legal obligation to provide a burial ground but says it is working hard to ‘ensure town residents can continue to lay their loved ones to rest within Horncastle’.
The council has been searching for a site for a new cemetery for several years. They previously identified land off Boston Road only to dicober ‘terst’ graves flooded with water from the nearby River Bain.