Wash Cycle Laundry, a Philadelphia-based commercial laundry service that uses sustainable practices, including delivering laundry by bike and using eco-friendly detergent, recently received a $450,000 loan from The Distinguished Social Ventures Foundation to help create job opportunities for adults re-entering the workforce.

“With our investment in Wash Cycle Laundry, we hope to see them amplify their social impact, creating 500 jobs in the next 5 years,” said Andy and Andrea Potash, founders of the New York-based foundation, in a press release.

However, this is no conventional loan. The Potash family and Wash Cycle Laundry worked out loan terms that reward social impact.

The interest rate on the loan will decrease in relation to the number jobs Wash Cycle Laundry creates for adults re-entering the workforce after a period of welfare dependence, incarceration, homelessness or addiction. Nearly half of the company’s 50-person workforce is already from this group.

“It’s a five percent loan, and it has the ability to go down to a one percent loan,” said Gabriel Mandujano, founder and CEO of Wash Cycle Laundry.

The agreement also allows Wash Cycle to defer payments until it becomes profitable.

“We’re still sort of in expansion mode, so right now we’re prioritizing growth over current profitability,” Mandujano said.

Wash Cycle is planning to set up shop in as many as 12 cities in the next five years, according to Mandujano, and up to six in the next year. It currently has branches in Washington DC and Austin. Most of the 500 new jobs, he said, will come from expanding into new markets, as well the continued growth of existing branches.

But what kind of jobs is Wash Cycle creating? As recent protests have shown, low-wage workers don’t just want jobs. They want fair pay as well.

The living wage for a single adult in Philadelphia County is $10.09 an hour, according to the Massachusetts Institute of Technology’s Living Wage Calculator, which Wash Cycle Laundry references when setting wages.

At the moment, “we’re not quite there,” Mandujano said.

Around 75 percent of the staff currently meet the threshold, and the rest will be brought to that level by the end of the month.

The difficulty in raising wages, Mandujano explained, is that Wash Cycle needs to be competitive in a sector that generally pays low wages.

“Laundry has a reputation as a low-wage industry for a reason,” said Mandujano, “and obviously with us being a company that is competing against other folks who are paying people minimum wage — good intentions only get you so far. You have to prove yourself in the marketplace. You have to prove you can be more efficient.”

Photo via Alex Vuocolo