Reedview Credit's inventory loan calculator for New Bedford, Massachusetts owners estimates a monthly payment and total cost from an amount, a rate and a term. This page also shows how to work out inventory turnover and carrying cost by hand, what a loan calculator leaves out, and how term length changes the payment.
Inventory Loan Calculator for a New Bedford, MA Stock Purchase
Enter the amount of the stock purchase you plan to finance, an annual rate to test, and a term in months. The calculator returns a monthly payment and the total paid. Try a few rates and terms; the spread between them shows how much the terms of an offer matter.
The calculator does arithmetic only. A partner sets the real rate, term and fees after reading the request. Inventory financing explains how those offers work.
Inventory Turnover Calculation by Hand: Cost of Goods Over Average Stock
Inventory turnover is cost of goods sold for a period divided by average inventory at cost over that period. Illustration only, invented figures: a store with $420,000 in annual cost of goods, $62,000 of stock at the start of the year and $78,000 at the end has average inventory of $70,000 and turns it about 6.0 times a year, roughly every 61 days (our arithmetic).
If an inventory loan's term is shorter than the time stock takes to sell, payments come due before the stock has earned them. Match the term to the turn.
Inventory Carrying Cost Calculation: Interest, Storage, Shrink and Obsolescence
Carrying cost is what it costs to hold stock: interest on money tied up in it, storage space, insurance, shrink, and the risk that it goes out of style or out of date. Owners estimate it as a percentage of average inventory. Illustration only, invented figures: at an invented carrying cost of 22% a year on $70,000 of average stock, holding it costs about $15,400 a year (our arithmetic).
- Interest: the rate on any financing, or what the cash could earn elsewhere.
- Space: the share of rent and utilities the stockroom uses.
- Insurance on the stock.
- Shrink: spoilage, damage and theft.
- Obsolescence: stock that loses value as it ages.
Business Loan Calculator Online: The Four Inputs and What They Leave Out
A loan calculator uses four inputs: amount, rate, term and payment frequency. It leaves out origination and documentation fees, any required down payment, prepayment terms, and whether the rate is fixed. Two offers with the same rate can cost different amounts once fees are added.
Add every fee to the payments and compare totals. If an offer deducts a fee from the amount paid out, enter the amount actually received to see the true monthly cost of the money in hand; the gap between the two results is the fee's effect.
Small Business Loan Calculator Results Compared With a Written Offer
A written offer shows the amount, the payment, the number of payments, fees, collateral and any personal guarantee. Put the offer's amount, rate and term into the calculator; if the payment it shows differs from the offer's, ask the partner why. Fees deducted from the amount, or a payment schedule other than monthly, are common reasons.
Business term loans lists the clauses to read in an offer.
Loan Term and Amortization: How Months Change the Payment
Adding months to the schedule trims each payment while the interest bill grows. Illustration only, invented figures: $40,000 at an invented 10.5% annual rate (our arithmetic):
| Term | Monthly payment | Total paid | Total interest |
|---|---|---|---|
| 12 months | $3,526 | $42,311 | $2,311 |
| 24 months | $1,855 | $44,521 | $4,521 |
| 36 months | $1,300 | $46,804 | $6,804 |
For inventory, the term should end before the stock it paid for is gone; for equipment, close to the machine's working life.
By Reedview Credit · Updated
