It's not how you see it, it's how your clients see it.  If they say it's a loan, explain to them that it might be better to have some documentation to back that up.  Gift tax returns are like alien tax clearances these days.  Everyone should know about them but not many people comply with the requirements.  

From our fearless leader Turbo Tax https://turbotax.intuit.com/tax-tips/tax-payments/irs-tax-rules-for-imputed-interest/L7UbulHpC

From the Powers that be https://www.irs.gov/businesses/small-businesses-self-employed/section-7520-nterest-rates

Be sure to review  your billing rate for new clients that come in with an unorganized grocery bag, or similarly things done without advance tax advise. 

Thanks.  I did explain the loan and they don't want to make it formal. It is however a loan.  I would be tempted to just explain it to them and not file 709.  It is however easy enough to file that so just do it?

A gift is not a loan.

A loan is not a gift.

Have them file a gift tax return when they forgive the loan.

Do they have to impute interest income every year to call it a loan? Probably just easier to file the gift tax form.

Ten years from now you're subpoenaed to testify for the sibling who is administering the estate and wants to collect the loan that everyone knew existed.  And you're going to look very foolish, or greedy, saying "I charged them for a gift-tax return because that's what I wanted to do."  

yikes

"Do they have to impute interest income every year"

There's some exception to the imputed interest rules for family/personal loans. This probably falls within that.

And what's the big deal about them not jotting down on a piece of paper:

Kid - we're loaning you $100,000 to help you buy a house. You will pay it back (specify when)

Signed, Mom, Dad, Kid.