PROVIDENCE, R.I. (WPRI) – Three out-of-state investment companies have filed applications to participate in a controversial $42 million small business incentive program, including two that lobbied for its creation.

The three companies – Advantage Capital, Enhanced Capital and Stonehenge Capital – submitted applications with the R.I. Commerce Corp. to qualify for the so-called Small Business Development Program.

The agency’s Investment Committee met to discuss the applications in executive session during a regularly scheduled meeting Monday, and no votes were taken.

The program was championed by the General Assembly but slammed by Gov. Gina Raimondo, who claimed it would benefit out-of-state investors more than Rhode Islanders. She has raised the specter of the 38 Studios debacle to criticize the program.

At least two of the three companies, Advantage Capital and Enhanced Capital, hired lobbyists earlier in the year and testified in favor of the new tax credits at a Feb. 6 House Finance Committee. Advantage Capital has hired Pannone Lopes Devereaux & O’Gara, while Enhanced Capital is using a Government Strategies Inc. team that includes Joe Walsh.

Stonehenge Capital, meanwhile, hired Christopher Vitale and Stephanie Federico of the lobbying firm Capitol City Group in September, according to the secretary of state’s office.

Proponents of the program argue it will provide much-needed capital in a state where funding sources for small businesses are scant. But critics insist it’s poorly designed and taxpayers end up covering every two of three private dollars invested.

Under the law, qualified investment firms put money into a fund that provides capital to small business. In addition to profiting off whatever returns the business generates, the investors also benefit from state tax credits totaling about 64% of every dollar.

The state recaptures some of the investment if the business does well, but Rhode Islanders are on the hook for up to $14 million a year in tax credits for investors, according to the Senate Fiscal Office.

Commerce board members who oppose the program have issued stringent rules surrounding the application process, including a requirement that all applicants show evidence they or their affiliates have invested at least $100 million in nonpublic companies.

A detailed list of investments, job creation, economic impact reports, along with audited financial statements for each of the last 10 years, are also among the requirements.

Commerce spokesperson Matt Sheaff said the three applications submitted this week are under review.

Eli Sherman (esherman@wpri.com) is a Target 12 investigative reporter for WPRI 12. Follow him on Twitter and on Facebook.