A loan pursuant to Section 12894.3 shall not exceed 25 percent of the total cost of the project, or two million five hundred thousand dollars ($2,500,000), whichever is the lesser. Such loan shall be repayable over a period not to exceed 40 years. A period of development, not exceeding five years, may be allowed during which no payments on the principal of or the interest on such loan shall be required, when in the department’s judgment such development period is justified under the circumstances. If the payment of interest is deferred pursuant to this section, no interest shall be charged on the interest amount for which payment is deferred. The accrued interest shall be paid in annual installments during the remainder of the loan repayment period.