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Patty Hirsch, a senior editor at Marketplace, discusses factoring as a financing method used by small businesses. Recent concerns have arisen due to CIT, a major lender and factor, potentially going out of business. Factoring involves the relationship between a small business owner, like shoemaker Sam, and their client, such as Nordstrom. Sam produces 20 pairs of trendy shoes monthly, which Nordstrom consistently purchases. Factoring allows Sam to receive immediate payment for his goods from a factor like CIT, which then collects payment from Nordstrom later.