Loans made pursuant to this article shall be repaid to the state pursuant to a schedule mutually agreed upon by the state department and the hospital district receiving the loan, not exceeding 40 years, and at an interest rate not to exceed the five-year average of the return on the investment of state funds pursuant to Chapter 3 (commencing with Section 16430) of Part 2 of Division 4 of Title 2 of the Government Code. The state department shall grant all loans which qualify under the requirements of this chapter to the extent that funds are available therefor. No application for a loan shall be denied because previous applications have been made except that the state department may procure insurance to cover the losses, if any, in connection with such loans and the cost of such insurance may be charged to the independent agency. The cost charged to such an independent agency for the insurance shall not exceed 5 percent of the total of loan losses.