The recession may not have arrived yet for the rest of the country, but for area small business the future is now -- and bleak.

For them, the squeeze is already on, with high interest rates, unwilling lenders and a slump in the housing industry all adding more strain to the normally difficult task of surviving as a small business.

"The small entrepreneurs are out in the first trench," said Charles S. Caldwell, a partner in the Commodore Hotel corporation. "After the tanks roll over the first trench, they're going to hit the rest of y'all."

Caldwell and his partner have been hit by rapidly rising interest rates on the money they borrowed to buy out other interests and to improve the hotel. "When I signed this note last June, it was 13 1/4 percent, or high enough, and now it's over 21.5 percent," said Caldwell.

The increase will cost Caldwell about $100,000 more than would have paid if the rates had remained what they were when he borrowed approximately $1.3 million last summer.

"You can't find any long term money in this market, and I've been looking for it for nine months," he said. Like many other borrowers, Caldwell found the only loans available were loans with fixed rates that have floated sky-high, along with the increase in the prime rate to which they are pegged.

"I'm kind of fortunate to be hit with these escalating costs going into the best season of the year in April, but you're supposed to be putting your chestnuts away for the winter," said Caldwell. "I'm giving all my chestnuts to the bank."

"Borrowing money in the auto parts business is a thing of the past, said the owner-manager of medium sized auto parts warehouse and distribution center in northern Virginia. "We are very nervous. We're not sure what we can do. We just can't borrow money. We have to cut the costs of operations and that amounts to real soul-searhing," he said.

The dealer, who asked that his name not be used, borrowed money two years ago to expand and diversify his business. At the time he got the loan, which carries a variable interest rate, the interest rate was about 8 percent, he said.

Now he expects to pay 21.5 percent when he rolls over the loan -- a rate equal to the gross profits of the auto parts business.

"It puts you in a very tight squeeze," he said. The auto parts dealer has been able to adjust so far by not hiring replacements when workers leave, by reducing bonuses to himself and other executives and by delivering reduced services for more money.

The tighter things have gotten, the more time and attention he has had to devote to make ends meet. "All of a sudden, I'm out of the parts business and into money management," he said.

For other businesses, money is not available at any price. "We're managing to keep just above water," said Mary Kovacs, whose family owns and manages the Port O'Kings Wine and Cheese shop on Braddock Road in Fairfax County.

The family took over the business in July. "So far we're managing to break even, but there's no profit being made. Every month it's a hassle to get the bills paid," said Kovacs.

"What we really need is money to expand the business and that's what's unobtainable," said Kovacs. Banks will not lend money for the expansion that the Kovacs family believes would increase business, because the business has no track record, she said.

"If we can hang on for a year and then go back to the bank, maybe we'll have better success," she said. "We're better off than some others because we can hang on. But the money is going from the right hand to the left," she said.

In the meantime, she and her husband are working about 150 hours a week to make the business survive said Kovacs.

William C. Goode, president of Goode Refrigeration in Prince William County, said that the only loan he has sought lately was a vehicle loan for which he paid 13.5 percent. "That's a rate that would prohibit me from borrowing any more for vehicles." he said.

He has a line of credit tied to the prime rate, but he hasn't had to borrow on it. If he did, "It certainly would ouch," said Goode.

"Most people in my type of business and my size aren't even able to go in and ask a bank for money," said Goode. "Construction has fallen off to such a degree that I'm not sure a bank in its right mind, even at 20 percent, would lend money to a small business tied to construction," he said.

Goode supplies central heat and air conditioning systems for newly built homes, and services commercial heating and cooling plants. That service business, pared down operations and the lingering effects of a very good year will help carry him through the current hard times, he said.

"If the interest rates stay what they are, I wouldn't be suprised to see some 30 percent of the small businesses go out of business," he said.