Interest or profit?

We act for a number of property investment limited liability partnerships (LLPs) which have raised money in a number of ways: bank loans members' capital contributions and loans from members. Should the payment of interest on loans from members be treated as interest or should it be treated simply as a distribution of profits?
Generally LLPs are taxed as if they are conventional unlimited partnerships. This therefore suggests that the interest should simply be treated as a profit distribution and disallowed as an expense of property letting. But where the loan is evidenced by a legally enforceable loan stock agreement and as an LLP (unlike an unlimited partnership) has separate legal identity and can therefore enter into commercial contracts with its members my feeling is that one should follow the commercial reality of the situation and treat the payments as interest. The members are not contracting...