He turns in an Expense Report and you reimburse him. This latter is a good illustration of the importance of good accounting. Since petty-cash is an asset account, this has no effect on your expenses. When you go to replenish the box, you'll find that the receipts and slips will need to be accounted to many different expense accounts. Make sure you have, get or write software that can handle long transactions.
Reps prefer the former.
The bank loans you some money. The bank will expect you to make regular interest payments on that loan.