Here's what I see:

A person is a lender to the other entity. The first repayment is the original investment. None of these paragraph falls under tax reporting. Why would you Pay someone $1,000 a month, during this cycle?

The next part of the lifecycle is collecting some % of sales, like a commission. The business no longer has any of the investor's funds. This won't be a 1099-INT, because this is not Interest. There is no investment at this point. This would be 1099-Misc earnings. And why would you pay a person to handle the funds that are paid out once a month?

I agree; everything about this Smells bad.