Maybe this will help clarify things.
When you or any other entity borrows money, that money does not belong to the borrower. It never was, is not now and never will be the borrower's money. Therefore, it is not taxable income in any way, to the borrower.
When you or any other entity lends money, that money is "YOUR" money and you already paid taxes on it. When you lend it out it does not reduce your taxable income. When it gets paid back it does not increase your taxable income. However, as a lender you are expected to charge and collect interest on that money. You the lender *will* pay tax on that interest too - generally in the tax year it is paid to you. If you don't charge interest, then with rare exception (which appears to not apply here) you will be taxed on "imputed" interest which you are required to figure and report.
