Does Your Project Qualify?

In order to qualify for a grant, an agency must meet the following:

1. Must be established for at least five years

2. Demonstrated revenue growth, 3–6 months of cash reserves, and audited financials

3. A brick-and-mortar project exceeding $600,000

4. Sufficient infrastructure to meet reporting requirements

Start-ups and small agencies generally do not qualify for funding.  At the end of the day, the funder is primarily a bank.  It scours a grant application with the same lens as it evaluates a loan application.  An agency must satisfy the bank’s loan underwriting requirements, as if it were applying for a loan in the amount of the grant.

Each of the 11 FHLBs have different grant caps ranging in size from $850,000 to $3,000,000.  Since there is significant variation in grant caps, one should look strategically at which member bank one uses to approach the FHLB.

Congress created the Federal Home Loan Bank (FHLB) system in 1932 to stabilize residential mortgages during the great depression.  The FHLBs are wholesale banks that are owned by retail banks and financial institutions.  The FHLBs generate revenue by lending money to their owners.  By law, they must donate 10% of their net profits towards affordable housing initiatives.  Annually, this amounts to over $300 million nation-wide. 

The FHLB is a government sponsored enterprise which means it supports public goals while being privately owned.  The 11 regional banks that compose the system are owned by over 6,577 banks.  Since the FHLBs are privately owned and incorporated, HUD has no jurisdiction over these funds.  The primary vehicle for supporting affordable housing is through a competitive application process known as the Affordable Housing Program (AHP).  

AHP funds are brick and mortar funds that can be used to build new housing, acquire existing housing, or simply to renovate housing an agency already owns. The FHLBs have a broad definition of housing that includes shelters, program housing, transitional housing, and permanent housing.  Funds can go toward land acquisition, architect and engineering fees, developer fees, and housing construction.  Funds cannot be used for operational costs, furniture, nor office or classroom construction.

Nobody gives away hundreds of thousands of dollars without some strings attached. The grants are deployed as a forgivable loan with a term of 15 years at 0.0% interest.  There is no amortization.  If you want to discontinue the project during the retention period, 100% of the grant must be paid back. The agency needs to continue to operate and house the number of clients it promised at the time of application for the entire 15 years.  The sponsoring bank will place a lien on the property, in the amount of the grant, for the retention period, so that the agency cannot sell the property without the bank knowing about it.  If the agency ceases operations or moves during the retention period, it must return 100% of the funds.  It will also need to supply an annual report to ensure grant conformance.

Congress created the Federal Home Loan Bank (FHLB) system in 1932 to stabilize residential mortgages during the great depression.  The FHLBs are wholesale banks that are owned by retail banks and financial institutions.  The FHLBs generate revenue by lending money to their owners.  By law, they must donate 10% of their net profits towards affordable housing initiatives.  Annually, this amounts to over $300 million nation-wide. 

The FHLB is a government sponsored enterprise which means it supports public goals while being privately owned.  The 11 regional banks that compose the system are owned by over 6,577 banks.  Since the FHLBs are privately owned and incorporated, HUD has no jurisdiction over these funds.  The primary vehicle for supporting affordable housing is through a competitive application process known as the Affordable Housing Program (AHP).  

AHP funds are brick and mortar funds that can be used to build new housing, acquire existing housing, or simply to renovate housing an agency already owns. The FHLBs have a broad definition of housing that includes shelters, program housing, transitional housing, and permanent housing.  Funds can go toward land acquisition, architect and engineering fees, developer fees, and housing construction.  Funds cannot be used for operational costs, furniture, nor office or classroom construction.