The term 'time value of money' is still a useful term for a no-risk interest rate. It simply measures the amount you (or anyone else) would require to part with their control of their savings. The utility, as you pointed out, would be derived by the borrower as they put the money to work, perhaps building and selling a computer to pay back the original loan plus interest and still keep a profit. The other component of interest is the risk premium to compensate for a possible default.
indeed. However. It implies that money is special in terms of having a time value. Any resource (or in economists terms, "utility") has a time value associated with it. You therefore need to be earning interest on your currency itself, without relending it at all, since you're already got 1 layer of debt beneath you, the layer inherently I'm bedded in the currency itself.