Final answer:
Internal financing is a limited source of finance in which a firm uses its own resources, such as retained earnings or personal savings, to fund its operations and growth.
Step-by-step explanation:
When a firm cannot raise money from the stock exchange and depends on how much the members have invested in the business, it can consider internal financing. Internal financing involves using the company's own resources, such as retained earnings or personal savings of owners or managers, to fund its operations and growth.
This option allows the firm to maintain control of its operations and avoid commitments to scheduled interest payments or selling off ownership to the public. However, it is limited to the amount the members have invested in the business.