Reg-D 506(c) vs. Reg-A+: Which Exemption Fits Your Raise?

Reg-D 506(c) and Reg-A+ both let you advertise a capital raise publicly, but they differ on the two variables that decide most raises: who is allowed to invest, and how much filing work happens before you can accept a dollar. Rule 506(c) has no offering ceiling and no SEC review, but every purchaser must be an accredited investor whose status you verify. Reg-A+ opens the raise to non-accredited retail investors and caps the round at $20,000,000 (Tier 1) or $75,000,000 (Tier 2), with an SEC-qualified offering statement required before any sale.

That trade — speed and no cap versus reach and retail access — is the entire decision. Cost, timeline, and marketing model all follow from it.

The two exemptions side by side

What Rule 506(c) actually requires

Rule 506, "Exemption for limited offers and sales without regard to dollar amount of offering," splits into two paths. Paragraph (b) is the traditional private placement: no general solicitation, up to 35 non-accredited but sophisticated purchasers in any 90-day period. Paragraph (c) trades that for advertising rights, on the condition that all purchasers are accredited investors and the issuer "shall take reasonable steps to verify" that status.

The verification obligation is the operative constraint, and it is the one issuers most often underestimate. Rule 506(c)(2)(ii) sets out non-exclusive methods for natural persons — reviewing IRS forms reporting income for the two most recent years plus a written representation about the current year, reviewing net-worth documentation dated within the prior three months, or written confirmation from a registered broker-dealer, investment adviser, attorney, or CPA. A checkbox in which the investor asserts accreditation is not, on its own, reasonable verification.

506(c) exists because Rule 502, "General conditions to be met," prohibits general solicitation at paragraph (c) and then carves out 506(c) explicitly. That carve-out is what makes paid acquisition, public landing pages, and content marketing legally available to a private placement. The two Reg-D paths are compared in detail in our breakdown of 506(b) vs. 506(c) solicitation rules.

On the filing side, Rule 503, "Filing of notice of sales," requires a Form D — a short notice filing, not a registration statement subject to staff comment. Nobody at the SEC reviews the disclosure before you sell.

What Reg-A+ actually requires

Rule 251, "Scope of exemption," sets the ceilings: Tier 1 covers offerings where aggregate offering price and aggregate sales do not exceed $20,000,000 in 12 months, including not more than $6,000,000 from affiliate selling securityholders; Tier 2 raises those figures to $75,000,000 and $22,500,000.

Eligibility under Rule 251(b) is defined by exclusion: the issuer must be organized under the laws of the United States or Canada with its principal place of business there, and must not be a blank-check or no-business-plan development stage company, a registered investment company or BDC, an issuer of fractional undivided oil, gas, or mineral interests, delinquent on required Rule 257 or Exchange Act reports, or disqualified under Rule 262, "Disqualification provisions."

The structural difference is the qualification gate. Rule 251(d)(1) provides that, except as allowed by Rule 255 ("Solicitations of interest and other communications"), no offer may be made unless an offering statement has been filed; Rule 251(d)(2) provides that no sale may be made until it has been qualified. That offering statement is Form 1-A, governed by Rule 252 ("Offering statement") and Rule 253 ("Offering circular"), and SEC staff comment on it before qualification. Our breakdown of the Form 1-A qualification timeline covers that review cycle in practice.

Tier 2 also carries a per-investor limit. Under Rule 251(d)(2)(i)(C), a non-accredited purchaser's aggregate purchase price may be no more than ten percent of the greater of annual income or net worth (natural person), or revenue or net assets (entity). Unlike 506(c) verification, the issuer may generally rely on the purchaser's own representation — a materially lighter operational burden.

Then there is the reporting tail. Rule 257, "Periodic and current reporting; exit report," requires Tier 1 issuers to file a Form 1-Z exit report within 30 calendar days of termination or completion, while Tier 2 issuers file annual reports on Form 1-K plus semiannual and current reports. A Tier 2 raise is not a one-time filing event; it creates a recurring obligation that outlives the campaign.

The decision, in the order it should be made

1. Determine whether you need non-accredited investors. This is the only question that cannot be worked around. If the raise depends on a retail audience, a customer base, or a community, 506(c) is unavailable. If the capital can come entirely from accredited sources, 506(c) removes an SEC review cycle from the timeline.
2. Check the amount against the ceilings. 506(c) has no cap; Reg-A+ stops at $75,000,000 (Tier 2) or $20,000,000 (Tier 1) in a 12-month period. A raise above the Tier 2 ceiling is effectively routed to Reg-D or to registration.
3. Price the compliance load, not just the legal fees. Reg-A+ Tier 2 requires audited financials, an SEC-reviewed offering circular, and ongoing 1-K/1-SA/1-U reporting. 506(c) requires a Form D and a defensible verification process for every investor. The recurring obligation is the one most often omitted from a budget.
4. Model the state layer. Reg-A+ Tier 2 and Rule 506 offerings both benefit from federal preemption of state registration, though notice filings and fees still apply. Tier 1 does not, and is reviewed in each state where you offer — which is why multi-state Tier 1 raises often cost more in aggregate than the lower ceiling suggests. See our guide to blue sky filings and NSMIA preemption.
5. Look at what the investor receives at exit. Rule 506 securities are restricted, subject to holding-period and resale conditions; Reg-A+ securities are generally freely transferable by non-affiliates. For a retail audience that difference is a material part of the pitch — see our analysis of resale restrictions across exemptions.
6. Confirm timing tolerance. A 506(c) offering can accept capital as soon as documents are ready; a Reg-A+ offering cannot until the SEC qualifies the offering statement, and that timeline is not under the issuer's control. Consult counsel to determine which exemption fits the specific facts of your offering.

Why the marketing models are not interchangeable

Both exemptions permit general solicitation, which leads founders to assume the acquisition playbook transfers. It does not — the economics diverge at the top of the funnel.

The verification step is where most 506(c) funnels leak. An investor who has clicked an ad, read the deal, and decided to commit is then asked to upload tax returns or brokerage statements — and a meaningful share stop there. Treating verification as a back-office task rather than a designed funnel step is among the more expensive mistakes in accredited-investor acquisition; the patterns are catalogued in our analysis of why most Reg-D 506(c) campaigns underperform.

Reg-A+ has a different structural problem: it needs volume, and volume needs lead time. Rule 255 permits solicitations of interest before the offering statement is filed or qualified, so an issuer can build audience while review is pending rather than starting cold on qualification day. Issuers who wait spend the first weeks of a live offering doing work that could have happened earlier. See our guide to Reg-A+ testing the waters.

Where each exemption tends to fit

These are patterns, not rules; the right answer depends on facts specific to the issuer.

• Real estate sponsors and funds frequently use 506(c): the investor base is already accredited, check sizes are large, and the offering can close in tranches without a ceiling. See our real estate fund marketing page.
• Consumer brands with an existing customer base tend toward Reg-A+, because the customers are the investor pipeline and most of them are not accredited.
• Operating companies raising above $75,000,000 sit outside the Reg-A+ ceiling and default to Reg-D.
• Issuers who need capital inside 90 days generally cannot use Reg-A+, since qualification timing is not within their control.

Growth Turbine has provided marketing support across more than $490M in aggregate issuer-reported totals, with 200+ campaigns supported across Reg-CF, Reg-D 506(c), Reg-A+, and tokenized securities offerings, spanning 23+ crowdfunding platforms and 25+ industries. The consistent pattern: the exemption decision constrains acquisition strategy far more than issuers expect at the point they make it, and reversing it later means re-papering the offering rather than adjusting a media plan. One Reg-D 506(c) hospitality and real estate campaign generated 12,500+ qualified leads for that single offering — volume that only matters when the infrastructure exists to verify and convert it, as detailed in that case study.

Frequently Asked Questions

Can I advertise a Reg-D 506(c) offering publicly?

Yes. Rule 502(c) prohibits general solicitation for most Regulation D offerings but expressly carves out Rule 506(c), which permits public advertising, paid media, and open landing pages. The attached condition is that all purchasers must be accredited investors and the issuer must take reasonable steps to verify that status before the sale.

Which is more expensive, a 506(c) raise or a Reg-A+ raise?

Reg-A+ generally carries higher fixed compliance cost, because Tier 2 requires audited financial statements, an SEC-qualified Form 1-A, and ongoing Form 1-K, 1-SA, and 1-U reporting after the raise closes. A 506(c) offering requires only a Form D notice filing and no SEC pre-review, but shifts cost into per-investor verification and higher-touch investor relations. Model both against your actual raise size and expected investor count.

Do non-accredited investors have a limit on how much they can invest in Reg-A+?

In Tier 2 offerings, yes. Rule 251(d)(2)(i)(C) limits a non-accredited purchaser's aggregate purchase price to ten percent of the greater of annual income or net worth for a natural person, or revenue or net assets for an entity. The limit does not apply to accredited investors, nor where the securities will be listed on a national securities exchange upon qualification.

How long does it take to get a Reg-A+ offering qualified?

SEC staff review the Form 1-A and issue comments before qualification, so the timeline depends on the number of comment rounds and how quickly the issuer responds. No sale may be made until the offering statement is qualified under Rule 251(d)(2). Issuers commonly use the Rule 255 solicitation-of-interest period to build audience while review is pending.

Can I run a 506(c) offering and a Reg-A+ offering at the same time?

Concurrent offerings are possible but raise integration questions, which Rule 251(c) directs to Rule 152. The analysis turns on whether the two offerings are treated as one for exemption purposes and whether general solicitation in one affects the other. It is a fact-specific determination that requires securities counsel before either offering launches.

Do Reg-A+ and 506(c) securities have the same resale restrictions?

No. Securities sold under Rule 506 are restricted and subject to holding-period and resale conditions. Reg-A+ securities are generally freely transferable by non-affiliates, subject to any transfer provisions in the issuer's own documents. For a retail investor base, that difference is often material to how the offering is perceived.

Pick the exemption, then build the funnel around it

The exemption determines the audience you are allowed to buy, the friction between a click and a commitment, and the metric that tells you whether the campaign is working — none of it adjustable after launch. For accredited-only raises, see our Reg-D 506(c) marketing services; for retail offerings, our Reg-A+ marketing services. If the decision is still open, a market validation test measures which audience actually responds before the structure is fixed in a filed document. Bring us the exemption your counsel has settled on and we will build the acquisition program against it — talk to our team.

Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute legal, financial, or investment advice. Always consult with qualified legal counsel and financial advisors before launching a capital raise.