It’s bank lending without the bank. As traditional banks have cut back on business lending a new opportunity for a growing group of asset managers who are making loans to mid-market companies has been created. Investors find Direct Lending an increasingly popular answer to low-yield problems. Companies that are robust enough to dip into the syndicated debt market are choosing direct lending instead, and regulators are asking if the market can sustain such growth without creating a mess.

Here’s how it works.  Asset managers raise pools of money from investors interested in debt. The managers hunt for advisers with investment opportunities, or private-equity funds looking to finance acquisitions. The fund does its own research before deploying its money.

Borrowers are typically, mid-market-sized businesses that banks are no longer interested in lending to. Their need for credit and lack of good alternatives means direct lenders can get higher interest rates.

About $13.3 billion was raised globally in the first quarter of 2017, more than half the total for 2016, according to Deloitte. The U.S. is the biggest center for direct lending, with a 61 percent share of the market. As of June 2016, private credit providers had $595 billion in assets under management, according to research firm Preqin.

Read the entire article from Bloomberg here.