506(b) versus 506(c)
Section 5 of the Securities Act of 1933 requires all issuers to register securities with the Securities and Exchange Commission (“SEC”) unless an exemption applies. Almost every instrument utilized to raise capital is captured by this registration requirement. Regulation D serves as an important vehicle for certain companies to raise capital with fewer requirements than a public offering, thus saving significant time and money. This exemption, however, splits into two subsections, 506(b) and 506(c), each of which has different requirements, benefits, and disadvantages. Below is a chart highlighting the key differences.