They offer equity and it will be interpreted as equity so this can be only available (if you publicly announce that, depending on jurisdictions there is a maximum of people this can be offered to etc) to professional investors (minimal capital etc) in most jurisdictions. You can't just offer this to general public legally even if you call it a loan. It's like running a bank without license and saying that people are not depositing any money, they are only borrowing them to us.