Should I raise with Reg CF, 506(b), or 506(c)?

Reg CF, Rule 506(b), and Rule 506(c) are three commonly used federal exemptions for raising capital, including for real estate deals. The right one depends on who you want to invest, how you plan to market the offering, and how much disclosure you are prepared to make.

Who can invest

• 506(b): accredited investors plus up to 35 non-accredited investors (in any 90-day period), provided the non-accredited investors are sophisticated.
• 506(c): accredited investors only.
• Reg CF: anyone. Non-accredited investors are subject to per-investor limits based on income and net worth; accredited investors are not.

Accredited investors generally earn over $200,000 a year ($300,000 with a spouse) or have a net worth above $1 million excluding their primary residence. Under 506(b) and Reg CF you may generally rely on an investor’s own statement that they qualify; 506(c) requires you to take reasonable steps to verify accreditation, often through a third-party service.

How you can market

• 506(b): no general solicitation. Sales are generally limited to investors you have a pre-existing relationship with.
• 506(c): advertising of any kind is allowed, from the internet to TV and radio.
• Reg CF: you can promote the offering through the funding portal; advertising elsewhere is largely limited to brief notices pointing investors to the portal.

Limits, filings, and platforms

• 506(b) and 506(c): no cap on the raise or on individual investments. No pre-sale filing; after sales begin you file Form D with the SEC plus notice filings in investors’ states. Using a platform is optional.
• Reg CF: currently capped at $5 million per 12-month period, aggregated across issuers under common control. You file Form C before launching and ongoing reports afterward, including an annual report. The offering must run through a registered intermediary; on Invown, that is Invown Funding Portal LLC, an SEC-registered funding portal and FINRA member.

None of the three requires SEC or state registration of the securities. In general, a company with more than $10 million in total assets and either more than 2,000 investors of record or more than 500 non-accredited holders must become an Exchange Act reporting company; Reg CF investors can be excluded from that count if certain conditions are met.

Disclosure

Reg CF requires the disclosures in Form C, such as your business plan and financial statements. 506(c) and accredited-only 506(b) offerings have no specific disclosure mandated by law, though anti-fraud rules like Rule 10b-5 still apply, so issuers typically prepare offering materials anyway. Including even one non-accredited investor in a 506(b) triggers substantial required disclosure.

Reg CF and 506(c) can run concurrently. Regulation A is a separate exemption that is outside the scope of this article. These are securities offerings with real legal obligations, so confirm your choice with securities counsel, and see how raising on Invown works or contact support for Invown specifics.