I am wondering if there are any government or non-government type grants out there for small or midsize "green businesses." My friend owns a green businesses called Greenwerks which among other things completes site surveys, installs rain catchment systems, solar systems and even is a contractor to build "green" properties. We are not knowledgeable of grants or the grant process and are under the impression most grants are earmarked for non-profit organizations. Nevertheless, he and I are wanting to see if we can find a grant that will for example give us funds to install rain catchment or solar systems on 100 homes as a way to curve water use in the city (perhaps as a pilot program). We are located in Seattle, WA so any city, county, state or even federal program would be what we are looking for.

Along the same lines, I am wondering if there are any grants or special loan programs out there that help fund the construction of a "green" home. I've heard rumors that such grants exist through HUD or USDA but have been unsuccessful in finding one. Anyway, any resources anybody in the community knows about would be helpful.

You would want to hire and get a grant writer. You can apply to many different corporations, ( such as BP and others)
Also of course there could be tax breaks for those homeowners who install to help pay for install.