Your borrowers need some legal advice about formalizing their business arrangement. They're just kind of making things up as they go along; e.g. saying its a partnership, but taxing the income to Mom and Dad and, possibly, paying junior a salary. If one of them dies or mom and dad get a divorce it will be a mess.
I don't find that Missouri has enacted the uniform partnership act i.e. if there is no partnership agreement you did not make a loan to a partnership regardless of what the memo says. Depending on the wording in your documents, it's likely that you have a loan for which each individual is jointly and severally liable. That's also not smart from their point of view.
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.