Choosing between 506 B
and 506 C for your debt fund

sounds simple until you realize
the wrong choice could lock you

out of raising millions or even
cost you your legal exemption.

Let's walk through exactly how
to pick the right path for your

capital raise. Hi, I'm Tilden
Moschetti syndication attorney

and founder of Moschetti
syndication law. I help fund

managers set up their raises the
smart way so they can scale

without worrying about sec
headaches. Today, let's talk

about the critical choice every
fund manager faces 506 B versus

506 C.

You when you're launching a debt
fund, one of the first and most

important decisions you'll make
is whether to raise under Rule

506 B or Rule 506 C of
Regulation D. And it's not just

a technical decision. It shapes
how you find investors, how you

communicate and how much
compliance burden you carry

along the way. Most people first
hear about 506 B, because it's

the classic method. Quiet
raises, private conversations,

no billboards, no social media
blasts, no advertising under

506, B, you work within your
personal network, people you

know, people you have real
relationships with. You can

bring an unlimited number of
accredited investors, plus up to

35 sophisticated but non
accredited investors in any 90

day period, as long as they
truly understand the risks, and

that's the big advantage. You
don't have to verify accredited

investor status through third
parties. You can simply rely on

signed investor questionnaires
and the strength of your pre

existing relationships. But 506
B comes with real limitations.

If you slip up and post about
your fund publicly, even just

casually mentioning it on a
podcast or dropping a hint on

LinkedIn, you could lose your
exemption, and without that

exemption, the SEC could require
you to offer your investors

their money back. It's a fragile
path that requires discipline.

One wrong move in marketing, and
you're outside the bounds. Now,

compare that to Rule 506 C,
which opened the door to public

marketing for private offerings
under 506 C, you can market your

fund, openly on websites,
through ads, on podcasts, even

with live events or webinars,
you can cast a much wider net

and attract investors far beyond
your personal network, but that

freedom comes with a cost. Every
investor must be accredited, and

you must verify their status
with real documentation, tax

returns, W twos, brokerage
statements or a professional

third party letter, a simple
investor questionnaire just

won't cut it anymore. Choosing
between the two isn't just about

your preferences, it's also
about your business model, if

you already have a strong
network of qualified investors,

people you know who trust you,
506, B could be the smarter

path. It's simpler, cheaper and
requires less verification work.

Plus you can include a few
sophisticated investors who

aren't technically accredited
but have the experience to

understand complex deals. But if
you need to reach beyond your

existing network, if you plan to
scale nationally, tap into new

markets or build an online
brand, well, 506 C may be the

better choice. Yes, it's a
heavier lift up front, but

verification can feel intrusive
for investors, and some people

will balk at providing those tax
returns and financial

statements. But you see, if
you're prepared to manage that

process professionally, 506 C
can open up the doors that 506 B

simply can't It's also worth
considering your marketing plan.

If you plan to create a digital
presence, blogging, podcasting,

running webinars, building email
lists, you're already walking

into a public space trying to
fit all that under 506 B could

be dangerous.

506 C was built for this kind of
outreach. Though, there's a

third factor your fundraising
timeline, if you need to close

fast and you already have
investors lined up, well, 506 B

can get you to the finish line
quicker, verifying accredited

investor status on.

Or 506 C can slow things down,
especially if investors delay

sending documents. Speed matters
in competitive markets. Making

the right choice between 506 B
and 506 C isn't just about this

deal. It sets the tone for how
you build your investor base

long term. If you get it right
now, you'll make every future

raise smoother, faster and
safer. When you understand the

real differences between 506 B
and 506 C, you can raise money

the smart way, the compliant
way, and build a fund that's

ready to scale if you want help
picking the right path and

setting up your raise for
success, reach out. I'm Tilden

Moschetti, thanks for watching,
and here's to building something

great. You.