The moral function of forbiding loans with interest is to destroy the business of consumer lending (since it would no longer be profitable) and thereby prevent the real 'sin' which is consumer borrowing.
A business loan at least serves some productive function, and the person taking out a business loan is actually better off for having taken out the loan (assuming a sound business). Prohibiting interest doesn't interfere with this since equity (which Islam allows, Musharakah, etc..) is actually better for all involved anyway.
Not so with consumer borrowing where the borrowers' failure of character leads them to a worse and worse situation - western countries had no choice but to get rid of debtors prisons because this became such a problem, and the function of the bizarre western imposed monetary system (which is destroying many countries) was actually to reduce interest rates to facilitate the masses' addiction to debt.
A consumer loan may as well be an addictive drug preying on the weak. And unfortunately your good intentions amounts to giving people addictive drugs for free.
Islam does not per-say want to discourage consumer lending; what it attempts to forbid, are loans with interest. Islamic principles aim to have the community freely distribute the wealth in it, via interest free loans, which gain God's pleasure in this world and the next. So members of the community are encouraged to loan others, basically to "feel good" and do good.
I disagree with your free drugs analogy. IBB is attempting to show people that there are other ways to lending practices, that sometimes leads to good profits (via gratuity) than imposing interest fees. Often these loans are for legitimate purchase of products, and not just for quick gratification.
