Although local governments and nonprofit organizations frequently receive funding for housing and urban development, small businesses can also apply for federal grants and loans. Unlike city programs and nonprofit agencies, small businesses are allowed to receive a return on their investment in affordable housing units. Grant money for small businesses that are interested in constructing housing projects can come from both public and private institutions.

Federal Grants

The U.S. Department of Housing and Urban Development offers a wide variety of grants to small businesses that provide affordable housing within communities. The Building Neighborhood Capacity Program Training and Technical Assistance (BCNP), the Choice Neighborhood Implementation Program and the Choice Neighborhood Initiative Planning Grant are examples of grants available from HUD for small businesses. Other federal departments, like the Environmental Protection Agency, provide grants for small businesses who want to build environmentally friendly affordable houses. Capacity Building for Sustainable Communities is a joint venture by the EPA and HUD that provides a maximum amount of $1 million to fund the construction of sustainable affordable communities. Although the Small Business Administration does not offer grants to small businesses, they provide information on where to locate grants, loans and venture capital.

State and Local Grants

Each state provides grants for small businesses and for those who wish to develop an affordable housing project. For instance, California has a list of affordable housing grants on its Department of Housing and Community Development website. New York also provides a grant program for those wishing to contribute to the development of affordable houses and units. Some cities also offer funding for affordable community development. Jersey City, New Jersey, for instance, offers information on their affordable housing grants, stimulus money, and funding programs on their Division of Community Development website. Washington announced in September 2012 that over $35 million would be available for affordable housing development and retention through the Department of Housing and Community Development. To find what your state and city offer, visit your local government's housing, community or economic development website.

Grants from Organizations

Sometimes community development organizations or other nonprofit agencies may provide funding incentives for small businesses who are seeking to build affordable apartments or houses. NeighborWorks America awarded roughly $35 million in affordable housing grants in 2011. The Charles Stewart Mott Foundation also has a list of grants offered for affordable housing, community development and shelter construction projects on their website.

Grants from Corporations

The National Low Income Housing Coalition reports that HUD budget declined by 40 percent between 1976 and 2002. The private sector grant funding has helped fill the gap for community and housing development. Bank of America announced in 2012, that it would donate over $22 million in grant money to help develop housing for the homeless and underprivileged. FHL Banks, a group of national lenders, offers the Affordable Housing Program which houses the largest amount of private sector affordable housing grants.