Which would mean that much much less of it would get done, which is not a clear win.
I agree with that. Seeing more of this thread, I would clarify that I agree that interest rewards people for accepting risk in addition to temporarily losing the use of their money, and I support that.
I just want to point out that the phenomenon of interest-free lending as charity is a real one.
Lending with no interest AND collateral creates a very perverse set of incentives for the lender.