The state department shall prepare and adopt regulations establishing the specific criteria to be used for the approval of a loan application of a district hospital under this chapter to ensure that the hospital district complies with the intent of the Legislature set forth in Section 32350.

Within 120 days after submission of an application by a hospital district for a loan under the provisions of this chapter, the state department shall submit its final recommendation to the Legislature with respect to the approval or disapproval of the loan in order to assist the Legislature in determining whether to appropriate funds for the making of the loan. The state department shall notify the hospital district submitting the application of its tentative decision to recommend approval or disapproval of the loan within 90 days after receiving the application in order to allow the hospital district to present additional data as may be necessary to justify the loan.