High interest rates are forcing hundreds of small businesses to shut down in Maryland, five state business officials told a congressional committee yesterday.

"It's not our fault," said Martin Poretsky of Poretsky and Starr Inc., a Bethesda builder. He said soon the only two kinds of home builders left will be broke and out of business, and "you're talking about established, well-managed firms."

The 1980s was supposed to be the decade of housing demand because the Baby Boom generation was of prime home-buying age, Poretsky said. But, instead, "We are in a crisis."

Poretsky and other owners of small businesses testified before the Joint Economic Committee on how high interest rates are affecting them. Sen. Paul Sarbanes (D-Md.) said "the problems created by continuing high interest rates are approaching crisis proportions."

Sarbanes said in written testimony that a Silver Spring Oldsmobile dealer told him that interest expenses have surpassed rent and advertising as the largest item on the balance sheet for many car dealers. The cost of keeping a car in a dealer's inventory has risen from $85 last year to $214 because of the interest costs, Sarbanes said.

Bill Cairns, owner of Bill Cairns Pontiac, said four years ago he made plans to build a new showroom in Marlow Heights and had a commitment for a loan at 9 1/2 percent. The project was delayed and couldn't begin until last year, but then the banker backed out of his loan commitment, Cairns said. Cairns then got another loan, but the interest rates are strangling him financially, he said.

"During the last 10 months, I paid $1 million in inter est alone," Cairns said. "That's a staggering figure. That's about twice what I should have paid, without a doubt."

R. Hursey Porter, president of the Maryland Association of Realtors, said the real estate industry is reaching a crisis stage because of high interest rates. He said more than 70 percent of sales by his company used creative financing rather than conventional mortgages. Sales have been off in the past two years by about one-third.

The problem of selling a home is even harder for those who are forced from their jobs.

Poretsky said rates are so high that "neither a senator nor congressman nor the governor of Maryland could afford a $90,000 town house" in the Maryland suburbs with current mortgage interest rates hovering between 17 percent and 18 percent.

"What benefit is being derived from the ruinations of business?" Poretsky asked.

Earlier, Murray L. Weidenbaum, chairman of the President's Council of Economic Advisers, defended the president's new proposed budget cuts and added that high interest rates aren't all bad. People who have invested money in interest-bearing instruments are benefitting from the rates, Weidenbaum said.

He defended proposed cuts in social programs, saying "we have in effect launched the largest and most effective antipoverty program." He said the Reagan administration program has produced private-sector jobs "and not make-work jobs."