Intrastate offerings and state crowdfunding
Selling shares or notes only to people who live in your own state, under the federal intrastate exemptions and your state's securities law. Some states have their own crowdfunding exemptions with low limits per investor, which let local customers and neighbors invest small amounts.
- Shares
How it works
A sale of shares or notes to the public is a securities offering, and it must be registered with the SEC unless an exemption applies. The intrastate exemption (Section 3(a)(11) of the Securities Act) covers an offering made and sold only to residents of one state by a company organized and doing business there. It sets no limit on the amount or the number of investors, but if even one buyer lives out of state the exemption may be lost.
The SEC's rules give clearer tests:
- Rule 147: the company is organized in the state, has its principal place of business there and meets at least one test showing it does business there; it offers and sells only to residents of that state (or people it reasonably believes are residents) and gets each buyer's written statement of where they live.
- Rule 147A: the same, except that the company can be organized in another state, and offers can be seen by people out of state (for example on a website), as long as only in-state residents buy.
- Resales: for six months after the sale, investors can resell only to people living in the same state.
The state's part: the federal exemptions do not cover state law. You must still register the offering with your state securities regulator or use a state exemption, and several states have their own crowdfunding exemptions with limits on the amount raised and on how much each investor can put in. Federal and state anti-fraud rules apply to everything you tell investors.
Compared with Regulation Crowdfunding, which is federal, open to investors in every state and up to $5 million a year through an SEC-registered funding portal, a state offering reaches only your own state's residents, under limits your state sets.
Upsides and downsides
Upsides
- Lets customers, neighbors and local supporters invest, not only wealthy investors
- No federal limit on the amount or the number of investors
- Some states let you advertise the offering, as long as only residents buy
Downsides
- Only residents of your state can buy, and investors can resell only in-state for six months
- The rules differ by state, so what you can do depends on your own state's law
- Many small investors to keep informed, sometimes with yearly reports the state requires
Risks
- Selling to even one out-of-state buyer can lose the federal exemption
- Investors can lose everything, and unhappy local investors can damage relationships
- Anything misleading in what you tell investors can make you liable under anti-fraud rules
What it costs
- How it is priced
- A small share of the business, or notes that pay interest, sold to local investors
- Costs that are easy to miss
- Legal costs to prepare the offering and meet state rules, and state filing fees
- Portal or escrow fees where the state requires them
- Yearly reports to investors in some states
No federal limit. State crowdfunding exemptions set their own limits, such as $1 million to $2 million in 12 months in Minnesota and Washington.
Does it fit?
Could fit when
- You have a loyal local community of customers or supporters who would invest
- You are raising money for a community project and are willing to sell a small share or notes
Unlikely to fit when
- You want to keep all the ownership of the business
- You need the money within days or weeks
- Your customers and supporters live mostly outside your state
Who can use it
- Business types: Partnership, LLC, S corporation, C corporation, Benefit corporation, Cooperative
- Principal place of business in the state, and at least one of the tests showing the business is done there
- Offers (Rule 147) or sales (Rule 147A) only to residents of that state
- Registration with the state securities regulator, or a state exemption
Am I ready?
What a provider is likely to ask for. Tick what you have. Your ticks stay in this browser and nothing is stored. Checklist for all crowdfunding and community finance
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0 of 4 ticked
- Exemption chosen
- Residence checks
- Disclosure document
Regulation and protections
Regulators: U.S. Securities and Exchange Commission (SEC); State securities regulators.
Who runs it: State or local program.
Federal and state anti-fraud rules apply to everything said to investors. The state securities regulator oversees state registrations and exemptions, and some states cap how much each investor can put in.
Rules that differ by state
- Minnesota: MNvest (Minn. Stat. 80A.461) lets a business sell to Minnesota residents through a registered MNvest portal, under Rule 147A: up to $2 million in 12 months with audited or reviewed financial statements ($1 million without), at most $10,000 from each investor who is not accredited, with the money held in escrow until the minimum is reached, and a $300 filing fee. (Minnesota Statutes 2025, section 80A.461: MNvest exemption)
- Washington: Washington's crowdfunding exemption (RCW 21.20.880) lets a business doing business in Washington raise up to $1 million in 12 months after filing with the Department of Financial Institutions, with the money in escrow until the minimum is reached, limits on what each investor who is not accredited can put in ($2,000 or 5% of income or net worth for most), a one-year limit on resale, and a yearly report to investors. (RCW 21.20.880: small securities offerings, exemptions)
Types of provider: State-registered crowdfunding portals, where the state has an exemption that uses them; Securities lawyers who handle state offerings.
Also consider
What has changed
No changes since this page was published. It was last checked against its sources on October 20, 2026.
Sources
- SEC: Intrastate offerings (Section 3(a)(11), Rules 147 and 147A) · checked October 20, 2026
- 15 U.S.C. 77c(a)(11): the intrastate exemption (2024 edition) · checked October 20, 2026
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