Hi Soup,
You're dealing with more than just one issue here.
You really need to speak to a commercial banker who deals with SBA guarantees. Your personal credit history may be an obstacle, it may not. There have been SBA loans made to include operating capital, inventory and stocking, etc. It's best to find out NOW!
Your partner has fears. DON't ignore that! if your partner is feeling uncomfortable, and you haven't even started operations, there must be a reason! Find out before you get into a situation that could be very, very ugly down the road.
You mention the $20K is all you need as loan financing. You may want to examine boot-strapping options. Operate on a very tight margin, renting or co-opting equipment until you can afford your own. You may find people with the equipment who will make a private agreement with you to lease/buy.
The best advice I can offer is take a BIG step back, and analyse the entire situation with a strong pinch of skepticism. More people fail in a business start-up from over-optimism than from lack of money!
Good Luck!
Source: http://www.abusinessmentor.com