You would need to outlaw "BI payday loans" for this to not be circumvented almost immediately.

Black and Gray markets exist for a reason, and if you ban something, it wont go away, it will just go under ground.

Actually, you'd only need to classify the money from BI as not being subject to garnishment or collections. This is how Social Security is handled.

With this, they could loan the money to people and people would owe it, but they couldn't collect.

With such small amounts, the fees would be a huge % - no different than loan sharks everyone already has access to.

Not if we use cryptocurrency.

Can you expand on that?

Note: I'm pretty far on the 'yay cryptocurrency' scale, but I'm just missing what you're saying here.

then "We'll simply unleash wave after wave of Chinese needle snakes."