If you are a business owner, at some point you will likely find yourself in a situation where you need immediate funding for urgent bills or investments. Even if you expect significant profits to arrive in the near future, you don’t have time to wait until they do. Two of your main options for borrowing money include financial advances and loans. Each has its pros and cons, so take some time to consider which is right for your business.

Pledge Your Assets to Obtain a Cash Advance

A lesser known form of borrowing money is asset-based lending. This is not like taking out a loan; it enables you to obtain immediate capital based on expected future profits. One example of this type of lending is invoice factoring, in which another company buys your customers’ invoices so you get paid right away. There are many benefits to asset-based lending. For one, it doesn’t matter whether or not you have excellent credit. This is because the lender gets paid as you close sales. Likewise, you don’t have to place yourself in a financially risky situation if business slows down a bit.

There are also some drawbacks. In most cases, asset-based lending involves paying a certain amount for the lender’s services. Even so, if you have a steady number of sales, you may not be charged as much.

Take Out a Traditional Loan

Another option is applying for a traditional loan where you will be required to make regular payments at a set interest rate. One of the benefits of borrowing money this way is that it may cost less than getting a cash advance, though interest rates can vary based on your business’s type of service, age and financial position.

Traditional loans also come with added difficulties. You will likely need to have a good credit score, significant collateral and money for a down payment. Additionally, it often takes some time for banks to approve you and get you the money. This may present an issue if your business needs capital as soon as possible.

There are many reasons that your company may need some additional cash. Perhaps you need to invest in repairs for your shop or you are a bit short on paying this month’s bills. Remember that you have options. Whether you choose to use your assets to get a cash advance or to take out a loan at interest, make sure you get what your company needs to thrive.