Corporate borrowers are increasingly skirting traditional banks to secure debt financing and leveraged loans, which is creating a surge in demand for alternative lending services, according to a report from Reuters.

Reporter Jonathan Schwarzberg writes that demand for capital is outpacing the availability of new deals in the U.S. leveraged loan market, and firms like Octagon Credit, KKR and Jefferies -- which are subject to fewer lending restrictions than banks -- are rushing in to fill the gap. 

“We are not subject to leverage lending guidelines at this point, and we’re not criticized like a bank would be. It lets us do our own credit work, which I think is a good thing. We don’t have to rely on the regulators to tell us if it’s a good or bad loan. I don’t think we have ever turned down a deal because we didn’t think it would pass,” Lauren Basmadjian, portfolio manager at Octagon told Reuters.