Most giant life-insurance companies still turn up their noses at investments of less than $2 million. Given the due diligence and paperwork involved, bigger deals generally offer a more efficient way of putting billions of dollars to work. But some companies are finding that not all insurance companies toe that line completely. C. E. Niehoff Co., of Evanston, Ill., is a case in point.

A manufacturer of heavy-duty alternators, Niehoff was under pressure to refinance a five-year loan against a production facility. The existing lender was willing to rewrite the loan when the old one expired, in May -- but only for about $750,000 ($200,000 less than the original amount). So Ralph J. Hermann, the vice-president for finance, approached other lenders. The company's own bank wasn't doing real-estate deals, and banks that were doing them wanted Niehoff to shift its entire banking relationship to them. "We had a good relationship with our lender," says Hermann, "so I didn't want to do that."

After several frustrating weeks, the company's bank introduced Hermann to someone on the corporate-lending side of Metropolitan Life Insurance Co. By the end of April he had what he was looking for: a new five-year loan (amortized over 20 years) at a fixed rate of 10.25% on the building. The loan, moreover, was for $1.2 million, en-abling the company to pay down $450,000 on its floating-rate credit lines. Total fees came to 2% of the loan, says Hermann. "We were very pleased."

While the lion's share of Metropolitan Life's $130 billion in assets is invested in big companies, a small -- and growing -- portion of its lending is to small businesses, says Dean Bergquist, MetLife Capital's Chicago-based vice-president. Currently, he says, a $5-billion chunk of the portfolio (managed out of Bellevue, Wash.) is made up of loans to companies with sales as low as $4 million.

Many lenders, of course, have been ratcheting up their underwriting standards lately, but Bergquist says MetLife Capital's criteria have remained basically the same. It wants companies to have modest leverage, a three-to five-year history of profitability, and a clear ability to repay the loan from cash flow as opposed to collateral. "We're less concerned about what a company wants to borrow for," explains Bergquist, "than its ability to repay."

Other life-insurance companies -- both regional and national -- also operate in the midsize-company market from time to time. To find out if a company is doing smaller deals, contact the company's home office and ask for "corporate investments" or "capital markets." Or, like Hermann, get a referral from a banker. -- Bruce G. Posner