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Definition
Depreciation spreads the cost of a physical asset — machinery, vehicles, equipment — across the years it is used, rather than expensing it all at once. It reduces accounting profit but takes no cash out of the business in the period it is charged.
Why it matters for borrowing
Because it is a non-cash charge, depreciation is added back when calculating cash available for debt service, feeding the DSCR and EBITDA. See how to calculate DSCR.
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Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.