True to his documentary-influenced style of filmmaking, Loach wanted "Hidden Agenda" to have a grittily realistic look. He also wanted his actors to feel involved in the Irish problem, and persuaded four of them (McDormand, Dourif, Mai Zettlering and Bernard Bloch) to undertake the work of a human rights commission's investigating team.
To this end, they met, questioned and took statements from people who in real life said they had been ill-treated by security forces.
"They met about a dozen people altogether," said Loach. "These were people who'd had their homes wrecked, lost relatives, or been badly injured.
"I thought it would be difficult for the actors if they hadn't experienced Belfast. Visiting makes quite an impression; the British army on the streets, seeing armed soldiers outside your hotel, being stopped at a roadblock, all the visible signs of an armed political presence."
Loach had his own difficulties with the film, which largely centered around raising the money (almost $5 million) to make it. "The idea started with David Puttnam when he was studio head at Columbia," Loach recalls. "He called and said: Do you want to make a film about the Stalker affair?
"But Jim and I didn't want to re-tell the Stalker story. We felt that everyone in Britain would know it, and that there were other areas of the security forces operation which the Stalker story wouldn't touch."
Loach and Allen instead started work on the story that would become "Hidden Agenda." "We were in the process of writing the script" when Puttnam left Columbia, recalls Loach, "so then we had to find another producer."
This was not easy, because of the film's subject matter. "We tried everywhere, and though some of the (British) TV stations were interested, one couldn't raise the cash and another backed out. In the end, the only one prepared to put himself on the line was John Daly at Hemdale."
"Hidden Agenda" follows a number of controversial movies made by Hemdale. "Salvador" questioned U.S. foreign policy in that country, and the Oscar-winning "Platoon" painted a bleak picture of the Vietnam War.
"John has been a very supportive producer," says Loach. "He didn't want us to back off from the subject at all. And he was responsible for all the finance."
Over the years, Loach has become accustomed to seeing his projects falter because of the uncompromising nature of their themes. His "Questions of Leadership," a documentary abut the 1980 British steel strike, was judged too biased for TV and shelved. And "Which Side Are You On?," a film for the TV arts series "The South Bank Show," was not shown because of its footage of British bobbies beating up striking miners.
In the 1960s, Loach was part of a group of radical filmmakers working for the BBC. He first achieved prominence through his TV film "Cathy Come Home," about a single homeless mother whose children are finally taken from her by social workers. It was a national TV event; the subsequent outrage at the heartfelt story helped frame new legislation in Parliament.
Two of his feature films, "Poor Cow" (1968) and "Kes" (1969), were warmly received, as was his brilliant TV series "Days of Hoe," about the changing political complexion of Britain between World War I and the 1926 general strike.
But Loach has not prospered in the Thatcher era. He agrees it has been hard to remain a radical, dissenting voice. "There was a 10-year period when no producers got in touch," he says. "Anything I wanted to do, I had to start myself.
"I also ran up colossal debts. Not only was I making documentaries which didn't get shown, I was trying to get other films set up, and I spent a lot of money just running around."
Times got so tough that a couple of years back, he was reduced to making beer commercials for TV. The savage irony was that his employers were Saatchi & Saatchi, best known to the general public as the ad agency that helped establish and refine Margaret Thatcher's image.
"Oddly enough, after I did those commercials, people started taking me seriously in the business again," says Loach dryly. "They think you're not some lunatic. If you can do commercials, it shows a certain kind of professionalism."
That might seem odd for a filmmaker who has just won a major prize at Cannes. But now Loach is concentrating on how "Hidden Agenda" will be received.
Agreeing that it has the same appeal as a superior thriller, he says: "I hope people enjoy it as a story. It's an entertainment, I hope, as well as a thoughtful piece of work."
But he resisted a temptation to film "Hidden Agenda" as a thriller. "We decided to tell the story as straight as possible, without souped-up music or fancy camera angles.
"I felt if we used thriller technique, it would invalidate the sense of truth. We might get more people on the edge of their seats, but they might not believe it. I thought it more important for people to say, yes, this could be true."