This free calculator from Kitehill Commercial Capital, a small-business funding broker in Greenville, South Carolina, estimates the payment, total interest and total repaid on financed inventory from figures you enter. It is illustrative arithmetic only; lending partners set actual rates and terms, and real offers may include other charges.
What to enter
- Amount: the cost of the stock you plan to finance, at what you pay the supplier, not the retail price.
- Interest rate: the annual note rate written in a partner's offer. If you are only testing, try a few rates to see how sensitive the result is.
- Term: the number of months the financing runs. For inventory, set it close to how long you expect the stock to take to sell.
Turning the result into cost per unit
Divide the total interest by the number of units in the purchase. That is the financing cost each unit must earn back before it contributes any profit. Compare it with the unit's margin. If financing eats most of the margin on slow-moving lines, those lines may not be worth financing at all.
Then run the calculator again with a longer term to see what happens if the stock sells more slowly than planned. The gap between the two results is the price of overestimating demand.
Why the term matters more than it looks
Keep the amount and the rate the same and change only the term. On an amortizing payment, total interest grows roughly in line with the number of months, so stock financed over ten months accrues a little more than twice the interest of the same stock financed over four. If the goods are gone in four months but the financing runs for ten, the business keeps paying for stock it no longer has.
That is why inventory financing is most efficient when the term is matched to sell-through. Seasonal buys suit short terms; a standing level of stock that is replenished continuously may suit a revolving line instead, which is paid down as sales come in and drawn again for the next order.
Costs the calculator leaves out
- Charges the partner adds at funding or during the term.
- Storage, insurance and handling while the stock sits.
- Shrinkage, damage and obsolescence, especially for seasonal or perishable goods.
- Repayment structures tied to sales rather than a fixed monthly payment.
The calculator assumes a fixed monthly payment over the term. Many inventory products are repaid as goods sell instead, so treat the result as a way to compare scenarios, not a quote.
Next steps
Inventory financing explains how partners structure stock funding, and the resources section has the other calculator and guides.
By Kitehill Commercial Capital · Updated
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