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Factoring, in simple terms, involves selling a company's accounts receivable to obtain working capital. The specific type of factoring discussed is non-recourse full notification factoring. This means that the customers of the client are notified to pay the factoring company directly, and the factoring company assumes the credit risk, providing a form of credit insurance for the client. The speaker has a background in SBA lending and has transitioned to factoring, noting that many may be more familiar with loans. In the context of factoring, a comparable term to a loan is a "factoring facility."