The award-winning filmmaker said spending time with Mr Corbyn had shown him the Labour leader’s ability to connect with the public.
He suggested that if he entered Downing Street Mr Corbyn could transform the country, reports the Press Association.
With the presidential election looming in the US, the director admitted he was “scared shitless” by the prospect of Donald Trump entering the White House.
Loach, whose new film I, Daniel Blake chronicles the central character’s struggles with the bureaucracy of the welfare system, said Corbyn would not tolerate the “horrific” benefits sanctions regime.
The film, written by Loach’s frequent collaborator Paul Laverty, was based on their research of the benefits system and won the prestigious Palme d’Or award at Cannes.
He said: “I, Daniel Blake came about because Paul and I heard so many stories that were absolutely horrific, of people being sanctioned for the most absurd reasons, quite unnecessarily, quite wrongly.
“A man takes his pregnant wife to hospital because she is in premature labour and because of that he misses his appointment and he is sanctioned. He’s got a young child at home, a pregnant wife and no money.
“We heard hundreds of stories like that and we thought ‘this needs further investigation’.
“So we went round different cities, everywhere we went it was the same story.
“There’s clearly a conscious cruelty in way people are being punished for their poverty.”
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Loach said Corbyn would stand up to the system.
It was “salutary” to see “someone leading a major political party who will, I think, not tolerate this kind of abusive behaviour on the part of the state”.
He added that the Government needed to acknowledge there was still “mass unemployment” and many people were trapped in low wage, insecure work.
“There is a huge number of people who are working poor who have to get a top-up from the state in order to survive.
“This is a feature of this economy - it’s not down to people’s laziness but the attitude of the state, and in particular of this government, is that you are out of work because your CV isn’t good enough or you have missed an appointment.
“That’s not the case. You are out of work because there is no work, there’s very few jobs.”
Loach, who made a short film to aid Corbyn’s re-election campaign, had previously released The Spirit of ‘45, celebrating the achievements of the post-war Labour government which created the NHS.
Critics of Corbyn have suggested that Labour can only hope to achieve its policy aims if it can secure power - something they argue will be impossible with him as leader.
But Loach told the Press Association: “Absolutely he can be elected. The problem is he is low in the polls because most of his senior MPs keep telling people he is no good.”
He added: “The party has huge confidence in him, he has trebled the membership and he is clearly popular once you actually can get through the bad propaganda from right-wing Labour MPs, the BBC and the press.”
He continued: “When you see him connect to people there is no question that he makes real connections in the way other politicians don’t.
“That’s why they are so afraid of him and that’s why they are after him.”
Asked if a Corbyn premiership could transform the country in the same way as the 1945 government he said: “I think it’s a very different situation, but yes he could transform politics because he would be really curtailing the power of the big corporations.
“They wouldn’t be in the health service, at the moment they are setting it up for wholesale privatisation.
“He would stop the money draining out by resolving the PFI crisis; he would get the big corporations out of the transport system - out of the trains, out of the buses.”
Cathy Come Home director Loach also highlighted Corbyn’s approach to the housing crisis.
“Housing is another big issue. His policy of council housing with really affordable rent and to buy, absolutely what we need to solve the housing crisis,” he said.
“There is no question that what he is proposing is popular and because it attacks corporate power, that is why he is under such attack.”
Loach admitted he was “scared shitless” by the potential outcome of the US presidential election.
“The idea of Trump having his finger on the nuclear button is just terrifying,” he said. But Trump’s rival Hillary Clinton was a “very flawed candidate,” Loach added.
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