We are taking SAFEs in lieu of cash interest for seed stage companies. For later rounds there is flexibility given to the company to optimize the cash interest versus SAFE based on cash flows of the company.
It sounds like I have to return the $100k, plus some percentage of equity (in lieu of interest). If so, this sounds like an option for angels to take a position in a YC-backed company, and it would be friendly towards founders to label this product as equity financing and describe how the equity percentage is calculated.