T o a banker, Nicole Nazzaro, a marketing expert for small businesses in Seattle, should be the perfect borrower. Her company, Wok Popcorn Media and Communications, has low overhead and a steady stream of clients.

But when she learned that one of her lenders was jacking up rates to 17 percent on her business credit card – even though she hadn’t missed a single payment – she realized just how brutal this economy was getting.

“I pay all my debts on time, and I’ve never been refused credit,” says the member of the Rotary Club of Seattle. “I asked them if they had any flexibility, and they just said, ‘Sorry.’”

Nazzaro saw the episode as a challenge. She canceled that credit card on principle and started using another card she had in reserve. She limited her drawdown of cash, cutting her living expenses by a quarter. She now does almost all her banking with a local credit union, which is less inclined to slash her credit than the battered big banks, and she’s considering a Small Business Administration loan for a computer upgrade.

By being innovative about financing, Nazzaro is saving her business and laying the groundwork for when the economy rebounds. “It’s definitely a scary time,” she says. “But you can fight back.”

In a recent survey by the National Federation of Independent Business, a third of small businesses reported that they weren’t able to get any of the credit lines they’d applied for. Almost a fifth have seen the terms change on their loan or credit card, and a quarter think their very survival is now at stake. It’s a time of reckoning for small businesses across the United States, but the recession doesn’t have to take yours down.

Like Nazzaro, small-business owners can streamline their operations, scout for new sources of revenue, and get creative about funding. “If you have a good business, good credit, and a good idea about what you need the money for, you can still get a loan in your hometown,” says Jim Blasingame, a member of the Rotary Club of The Greater Shoals Area/Sheffield, Ala., and host of The Small Business Advocate , a nationally syndicated radio program. “Right now, you should operate for survival but still plan for success.”

Here are a few survival strategies.

Play defense. Leslie Reichert, a member of the Rotary Club of Uxbridge, Mass., and the owner of a ecofriendly cleaning supply shop, had a friend in the retail business whose bank pulled a line of credit with no notice. It prompted Reichert to check in with her own bank about her $50,000 line to make sure everything was in order. “I don’t use it for much, but I wanted to double-check that it will still be there if I need it,” she says.

Shop around. Credit cards aimed at small businesses, like the American Express Plum, have become popular recently, but the rates and fees on many credit offerings are going up. Look for cards that offer steep discounts for immediate payments, or extended no-interest payment periods if you need that extra time to cover the bills.

Think local. The giant banks, and prominent small-business lenders like CIT Group, may be in trouble, but many local lenders are still strong. If they know your name and your place in the community, they’ll be more likely to extend credit – and less likely to take it away for no reason. “It’s true that credit cards and the big banks have all been clamping down,” says Blasingame. “But that’s not true of most independent community banks and credit unions.”

Tap friends and family – carefully. This is often the first recourse for new businesses, because few financial institutions are willing to take a risk on an unproven company. Tread carefully, though: Make sure the family-and-friends funding doesn’t represent people’s life savings, but an amount they could potentially lose without affecting their lifestyle. And be sure to offer them competitive interest rates and payback terms. “Present your case as if your relatives were bankers,” advises Tom Gegax, author of The Big Book of Small Business .

Seek out venture capitalists. When in need of cash, go to the people who have it, such as venture capitalists or angel investors. Check out groups like the National Venture Capital Association to decide who to pitch to, but beware of those venture capital firms whose terms have become too onerous. If missing a payment or two gives them the right to take over the company, then the funding isn’t worth the risk.

Explore supplier financing. You may have worked with a particular company for decades, paid all your bills on time, and developed long-standing personal relationships there. The firm has no interest in seeing a reliable client go under, so ask whether it’s willing to undertake financing itself. “Or find a manufacturer or supplier who doesn’t yet have representation in the area, and sell them on the idea,” says Gegax, who did that with his tire company by approaching Michelin and Bridgestone. If you’re offering interest rates that are superior to the return on savings accounts, suppliers could see the opportunity as an additional source of profit.

Tap your home only if it’s financially prudent. During the real-estate boom, many small-business owners found financing under their own roof, thanks to rising home prices they could draw on at will. The housing crash, of course, revealed the risks of putting your home on the poker table. But if the equity in your home exceeds the amount you’re looking to draw out and your lender is amenable, it can be a handy way to create an emergency credit line – one that could be tax deductible, to boot.

Make the Small Business Administration work for you. This is one area where the nation’s stimulus package could affect you directly. The America’s Recovery Capital loan program is offering $35,000 for small businesses in trouble, featuring terms like zero interest, no fees to the agency, and a repayment schedule of up to five years. You can even use the loan to handle the existing debt that’s threatening to sink your business. If you’re having trouble getting funding from banks on your own, the Small Business Administration could be a critical lending lifeline to get you through the recession.

Chris Taylor is an award-winning freelance journalist based in New York City.