It becomes your duty to meet your commitment of business or loan payments.
The loss of business cannot be attributed to the person who has given you loan nor can you quote that as a reason for nor payment of loan or its interest.
If it was an investment from the other person you may explain him about the losses in the business and agree to return his amount in a time at a later stage and may even enter into an agreement with him for repayment with terms about interest etc.
If you do not have any partnership agreement or business agreement or investment agreement or any other evidence to prove that he had invested this money for business only and if you do not have any evidence for doing the said business, your partner will change his status as creditor and you a borrower. With the help of the documentary evidence in his possession he may sue you for recovery of his money. Therefore settle the things amicably by agreeing to repay the borrowed amount in a date convenient to both at a later stage.