Let JPMorgan Chase and the other big Wall Street banks risk precious billions on high-stakes trading desks. "Banks aren't lending. We make loans," says Michael Forman, Philadelphia lawyer-turned-boss of Franklin Square Capital Partners.

Of course some banks are lending — to college students, credit card users, even corporations. But Forman's point is clear: With banks hobbled by record low loan rates for blue-chip borrowers, and more careful regulation, independent firms like his are raising piles of investor cash and crowding into the business loan markets, seeking midsize debtors with steady cash flow but blemished credit ratings, who can be counted on to pay attractive rates, as long as they stay in business.

Cira Centre-based Franklin Square told the Securities and Exchange Commission on Wednesday that it has raised $2.5 billion from investors who want a piece of its three-year old FS Investment Corp.fund, which had made, bought, or financed loans to dozens of midsize companies — SunGard, Harrah's Chester, Playboy Enterprises, Frac Technologies — willing to pay rates in the 6 percent to 16 percent range.

Franklin Square funds are managed by GSO/Blackstone Debt Funds Management, New York. The group has worked with locally based Ira Lubert's LBC Credit Partnersand the Graham Groupon joint investments.

Franklin Square and its brokers charge outrageous fees by mutual fund standards — including commissions of as much as 10 percent. You can't buy and sell these closed-end funds like Vanguard mutual fund shares or ETFs — though Forman says he's considering an initial public offering that could allow investors to liquidate their shares and take profits before the loans are all paid off.

But the fund claims spectacular returns since its 2009 inception — a 7 percent annual yield, plus a 70 percent gain in the last three years in portfolio values — thanks partly to discount-priced loans that have regained value in the recovery. Using returns the firm reported to the SEC, an early 2009 investment of "$100,000 would be worth $155,000" now, even after commissions, Forman said.

With the original fund now closed to new investors, brokers are now peddling two other Franklin Square funds: FS Energy and Powerand FS Investment Corp. II. The group has expanded its Cira Centre space and now employs 50 locally, 110 total. Forman has more funds on the drawing board.

Maybe next, he says, it will be time to buy stocks: "Perhaps a bit more equity. I'd like to do a pure growth play."

Here's a sampling of other recent investments disclosed in SEC filings by Philly-based firms:

Radnor-based Milestone Partners on April 30 "completed a recapitalization" of Spartanburg, S.C.- and Philadelphia-based waste-cloth recycler Martex Fiber Southern Corp. (MFSC), in partnership with Martex cofounder and boss Jimmy Jarrett, plus loans from Sovereign Bank NA and THL Credit Inc. On May 3, the Securities and Exchange Commission posted a company filing showing Milestone raised $15.5 million for "MFSC Holdings Corp." That money financed the Martex deal, confirms Milestone partner John Nowaczyk.

Element Partners, Radnor, says it's joined Houston-based CSL Capital Management to buy three-year-old, Lafayette, La.-based Environmental Drilling Solutions (EDS), which counts gas drillers in Pennsylvania's Marcellus Shale and oil and gas firms in other states as customers.

For how much? On May 4 Element filed a statement with the Securities and Exchange Commission noting it had committed $24.8 million for an investment in "EDS Blocker L.L.C." That entity was used in the acquisition, but the number doesn't reflect the sale price, partner David Lincoln told me.

Onconova, Dr. Ramesh Kumar's and Dr. Premkumar Reddy's Newtown (Bucks)-based anti-leukemia drugmaker, has raised $7.05 million more, according to the SEC.

This marks the fifth year in a row that Onconova has raised millions, notes FormDs.com, a website founded by Villanova's John D. Hunt, which makes it easy to keep track.

Contact Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com or @PhillyJoeD on Twitter.