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Patty Hirsch, a senior editor of Marketplace, discusses factoring as a financing method for small businesses, highlighting its relevance due to concerns about CIT, a significant lender and factor. She illustrates factoring through the example of Sam, a shoemaker who produces 20 trendy pairs of shoes monthly for a single client, Nordstrom. At the end of each month, Sam ships the shoes to Nordstrom, establishing the relationship between a small business owner and their client, which is crucial for understanding how factoring operates. The summary underscores the implications of factoring for small businesses, especially in light of potential risks from major lenders.