When a manufacturing company in northern New Jersey needed a $1.3 million loan to buy a new warehouse, Summit Bancorp lenders put together the entire package in 20 days.

The Princeton, N.J., bank, in response to local consolidation and new competition, has revamped its small-business lending and developed a division that specializes in smaller real estate loans.

"The small businesses that were looking for a lower-end real estate loan had no place to go," said Laura Gilardini, senior vice president for small- business lending at Summit.

So it simplified its loan applications, reduced documentation requirements, and cut appraisal costs. The bank can process $100,000 loans for owner-occupied or investment properties within 10 days.

The revamping of small-business lending came on the heels of Summit's merger with UJB Financial Corp. and an increase in competition from superregional banks and nonbank lenders.

The bank also centralized its underwriting offices and began credit scoring of small-business loans. And it developed another division that specializes in government-guaranteed loans.

"It's not lending the old-fashioned way anymore," Ms. Gilardini said. "We are all competing based on turnaround time and pricing."

But Greg Schneider, executive vice president for lending at $175 million-asset Prestige State Bank in Flemington, said Summit's new lending division has presented no competitive threat.

"Some of the customers saw the merger and worried that the service would not be the same," Mr. Schneider said, "and that made them think about talking to other banks."

Mr. Schneider said the strongest competitors in small-business lending in New Jersey are Money Store Inc., AT&T Business Credit, and $4.5 billion- asset Valley National Bancorp.

Ms. Gilardini said banks would fend off competition from nonbank lenders with direct mail or telephone sales of banking products and credit scoring of small-business loans.

Small-business lenders, especially community banks, will be forced to develop subspecialties or niche banking products in order to compete with larger institutions, Ms. Gilardini said.

"Everyone is after small business now," she said. "Everyone is our competitor."

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