Impact Growth Capital Newsletter

 This week at IGC:
SEC Introduces New Flexibility on Accredited Investor Status — HUD Reinstates $40M Contract

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Politics

SEC Introduces New Flexibility on Accredited Investor Status

The U.S. Securities and Exchange Commission (SEC) has just provided clarity for both investors and firms under Rule 506(c) of Regulation D. In a recent no-action letter issued to Latham & Watkins on March 12, 2025, the SEC's Division of Corporation Finance introduced a practical new path for verifying accredited investor status. This guidance makes it easier for qualified investors to participate in private offerings while reducing unnecessary documentation and delays. It’s a development that could expand access and streamline investment processes for individuals.

Under the updated guidance, the SEC will not recommend enforcement action against firms that accept investments of $200,000 or more from natural persons, or $1,000,000 or more from legal entities, provided the investor affirms in writing that (1) they are an accredited investor and (2) the investment funds are not borrowed for the purpose of the investment. These elements are now deemed by SEC staff to satisfy the “reasonable steps” requirement for verifying accredited status in 506(c) offerings.

This is a significant shift. Previously, investors were often required to submit tax returns, W-2s, brokerage statements, or obtain third-party certifications from attorneys or CPAs—barriers that many considered intrusive or unnecessarily burdensome. With this new interpretive stance, the SEC has recognized that substantial investment size, paired with good faith representations, can be sufficient to demonstrate financial sophistication and eligibility.

For our investors, this means a smoother, more efficient path to participate in our offerings. If you have questions about how this change might impact your ability to invest, our team is here to walk you through the process.

Click Here to Read the Full No Action Letter

Public Housing News

HUD Reinstates $40M Contract

The U.S. Department of Housing and Urban Development (HUD) has reinstated nearly $40 million in Section 4 capacity building grants to Enterprise Community Partners, reversing a previous decision that had threatened to disrupt affordable housing initiatives nationwide. This funding is part of the Section 4 Capacity Building for Community Development and Affordable Housing Program, which supports nonprofits in developing affordable housing and community development projects. Enterprise, along with the Local Initiatives Support Corporation (LISC) and Habitat for Humanity International, serves as one of the intermediaries responsible for distributing these funds to local organizations.

The initial cancellation of the grants in February 2025 raised concerns among housing advocates, as it jeopardized numerous projects aimed at assisting low- and moderate-income families. Enterprise Community Partners, which has utilized Section 4 funding to support over 700 organizations and create or preserve more than 45,000 affordable homes over the past decade, appealed the decision. Their successful appeal underscores the critical role that such funding plays in addressing the nation's affordable housing crisis.

LISC also faced similar challenges with the initial funding cuts. The organization emphasized that for every federal dollar invested through Section 4, an additional $20 in private capital is typically leveraged, amplifying the impact of the program. The reinstatement of funds allows LISC to continue its work with over 1,400 local partners across all 50 states, the District of Columbia, and Puerto Rico, focusing on strengthening community development corporations and enhancing affordable housing access.

This development highlights the importance of sustained federal support for programs that empower local organizations to address housing affordability challenges. As the demand for affordable housing continues to grow, the collaboration between HUD and intermediary organizations like Enterprise and LISC remains vital in fostering resilient and inclusive communities.