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Under Rule 506(b) a sponsor cannot use general solicitation, so marketing must promote the firm and educational content, and specific offerings are discussed only with people who have a pre-existing, substantive relationship. Under Rule 506(c) a sponsor may publicly advertise the offering, but every investor must be accredited and the sponsor must take reasonable steps to verify it. Since a March 2025 SEC staff letter, verification can rely on written representations plus a minimum investment of $200,000 for individuals or $1 million for entities.
Key takeaways
- 506(b) still accounts for roughly 94% of Rule 506 capital; 506(c) about 6% (July 2022 to June 2023 estimate).
- The March 12, 2025 SEC staff no-action letter made 506(c) verification simpler for higher-minimum offerings.
- Under 506(b), you can still market your brand and education. You just can't publicly market the deal.
- Your counsel decides the exemption. Marketing should be designed around that decision, not the reverse.
What is the difference between 506(b) and 506(c)?
| Rule 506(b) | Rule 506(c) | |
|---|---|---|
| General solicitation (ads, public posts about the deal) | Not allowed | Allowed |
| Who can invest | Unlimited accredited + up to 35 sophisticated non-accredited | Accredited investors only |
| Verifying accreditation | Reasonable belief; self-certification is common | Reasonable steps to verify |
| Relationship requirement | Pre-existing, substantive relationship before offering | None |
| Disclosure to non-accredited | Required if any participate | Not applicable |
| Typical marketing | Brand, education, relationship-building | Brand, education, and the offering itself |
Which exemption do sponsors actually use?
Despite 506(c) being available since 2013, most capital still goes through 506(b).
Share of Rule 506 capital by exemption
Estimate for July 2022 to June 2023: about $2.7T under 506(b) vs $169B under 506(c)
Why the gap? Historically, verification under 506(c) meant collecting tax returns or third-party letters, which many investors found intrusive. That friction may shrink after the 2025 staff letter.
What changed with the March 2025 SEC staff letter?
On March 12, 2025, the SEC's Division of Corporation Finance issued a no-action letter describing a simpler way to meet the 506(c) verification requirement.
$200KMinimum investment for natural persons, with written representationsSEC staff, Mar 2025
$1MMinimum for entities accredited by total assetsSEC staff, Mar 2025
0Third-party financing of the minimum allowedWritten representation required
- The investor represents in writing that they are accredited and that no third party is financing the minimum investment.
- The issuer has no actual knowledge of facts suggesting otherwise.
- This is staff guidance, not a rule change. It does not alter the law, and counsel should confirm it fits your offering.
For sponsors with $200,000+ minimums, 506(c) is now more practical. That opens up ads, webinars and public content about the specific offering. Talk to counsel before switching.
How to market compliantly under 506(b)
| Usually OK under 506(b) | Talk to counsel first | Usually not OK under 506(b) |
|---|---|---|
| Brand ads promoting your firm and education | Webinars that discuss your strategy in depth | Ads promoting a specific open offering |
| Lead magnets about passive investing | Track record presentations | Public posts with deal returns or terms |
| Newsletters about markets and process | Mentioning that you have an upcoming deal | Cold emailing a deal to strangers |
| Podcasts and principal LinkedIn posts | Testimonials from LPs | Offering memorandum links on a public page |
The pattern: build relationships first with education, then discuss offerings with people you know. That is exactly what an attract-educate-qualify-book system does.
Notes for senior living sponsors
- Senior living combines real estate and operating business risk. Education should explain operator selection and care-level mix.
- Avoid claims about demographic demand that read like guarantees; frame data as context.
- Healthcare regulation adds disclosure complexity. Build extra counsel review time into your timeline.
Not sure which path fits you?
Take our free 506(b) vs 506(c) Path Finder. It asks 8 questions about your investors, minimums and marketing plans, and gives you a summary to discuss with counsel.
Find your path
Take the Path Finder →8 questions to prepare for your counsel conversation.
Frequently asked questions
You can post about your firm, your expertise and investing education. Posting about a specific open offering to the public would generally be general solicitation, which 506(b) does not allow. Check specific posts with counsel.
General solicitation means offering securities through public communications such as ads, public social posts, websites or seminars open to anyone, when the audience has no pre-existing relationship with the issuer.
Traditional methods include reviewing tax returns, bank and brokerage statements, or a letter from a CPA, attorney or registered broker-dealer. Since March 2025, SEC staff has indicated that a high minimum investment ($200,000 for individuals, $1 million for entities) plus written representations can be reasonable verification.
Sponsors can choose 506(c) for a new offering, and in some cases an offering can transition, but the rules around prior communications are technical. Always plan a switch with securities counsel.
It can be, because of verification and paid advertising. But it also lets you market the offering directly, which can shorten raises. The 2025 staff letter may reduce verification costs for higher-minimum deals.
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Sources
- Angel Investors Network, 506(b) vs 506(c): the two paths to raising capital under Regulation D
- Ropes & Gray, SEC issues no-action letter clarifying Rule 506(c) accredited investor verification (Mar 2025)
- Crowdfund Insider, SEC exempt offering data: Reg D, Reg A, Reg CF in 2024 (Apr 2025)
- SEC, Regulation D offerings statistics
This article is for educational purposes only and does not constitute legal, tax, securities or investment advice, or an offer to sell or a solicitation of an offer to buy any security. Consult qualified securities counsel about your specific offering.
