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Source of funds: Internal sources of finance

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An evaluation of internal sources of finance

Internal finance has no direct cost to the business and is relatively convenient. It does not normally increase the liabilities of the business. However, in the case of sale and leaseback, there will be leasing charges. Internal sources are limited and relying on these to finance growth would severely limit the pace and scale of expansion, because the finance would be restricted by the extent of the profits generated.