Following are some of the disadvantages of an internal source of finance, 1- It may not be a good idea to use an internal source of finance for long-term projects. 2- It does not lead to an increase in capital. 3- Internal finance may be limited in volume in comparison with the external source of finance. 4- It may limit the ability of the business to expand. For instance, the business with the policy not to raise finance via external financing may not reach its full growth potential