Banks and non-banks compete in UK unsecured SME lending, but only banks face risk-based capital requirements, and the two lender types screen borrowers differently. We study how capital regulation, lenders' screening technologies and their interaction shape this competition. Using confidential loan-level data and new hand-collected data on screening channels, we document that banks screen smaller loans online and larger loans through relationship managers, while non-banks screen all loans online. To separate screening precision from borrower selection and from the cost of capital regulation, we develop and estimate a model of lending. Our estimates show that non-banks assess risk more precisely when both lenders screen online, but banks become more precise once they switch to human screening. Capital regulation accounts for about a quarter of banks' cost of lending, and this cost depends on how precisely banks screen. In counterfactuals, if banks screened all loans online, credit would expand, but banks' default rates would rise, mainly because they would screen less precisely. Tighter capital requirements mostly push the riskiest borrowers out of credit. Where banks screen online and less precisely, they also lose some safe borrowers they misjudge as risky to non-banks.