It sounds to me that they are lending less that $100k, but are being repaid a full $100k, making this an original-issue discount loan. So even if they say 0% interest, there is still an implied interest amount.

When they would issue the loan, I think it would be journaled as a credit to cash and a debit to some sort of "loan repayment receivable". When they would receive repayment, they would debit cash, credit loan repayment receivable, and the gain would credit the income statement as interest income or "recognized gain due from lending activity", or something like that. The balance sheet would then balance with the gain hitting retained earnings.

Calling it "income" and "COGS" seems really odd to me; it sounds like one way to launder money. If a company is throwing around large sums of money like that without proper accounting for it, I'd steer clear.