The Nomad Trust is the smaller of the two organisations, with a reported income of £570,000 for 2011/12 and 16 employees. Lincolnshire YMCA has 76 employees and had an income of £2.3m in 2011/12.
In a joint statement, the two charities said they were planning to reach a decision by the end of the month with a view to merging in March. They will both continue use their names under any merged organisation.
Malcolm Barham, chief executive of Lincolnshire YMCA, would lead the new organisation because the Nomad Trust does not have a chief executive, the statement said.
"We’re retaining the brand of the Nomad Trust: they will be part of us but we will retain that brand because their work in street homelessness is well-known in the local area," Barham said. "It was partly to do with increasing the capacity of both organisations by sharing back-office staff, but our missions are almost the same.
"If the merger goes ahead, we will have a fully joined-up housing service – someone will be able to walk off the street into a night shelter, then on to intermediate accommodation in a hostel and finally to their own flat with the aid of our floating support team, and possibly with the same support worker all the way through that process."
The two boards of trustees will join together if the merger goes ahead.
Barham said he was unable to rule out any redundancies: "We’re not envisaging any major changes, but you can never say never."