Surety: Learn Abbrevs. ASAP!

“Boss, the FYE FS has NQAA and NWAA too low and D:E too high!”

“What the heck are you talking about?!”

Cool kids know these surety / construction abbreviations. Now YOU can be a cool kid too!

  • A/C: Air Conditioning
  • AAA: American Arbitration Association
  • ADA: Americans with Disabilities Act of 1992
  • AFSB: Associate in Fidelity and Surety Bonding
  • AGC: Associated General Contractors Association
  • AIA: American Institute of Architects 
  • AP: Accounts Payable
  • AR: Accounts Receivable
  • ARC: Airline Reporting Commission
  • BS: Balance sheet
  • CM: Construction Manager
  • CPM: Critical Path Method
  • CQ: Contractors Questionnaire
  • D:E: Debt to Equity (ratio)
  • D-B: Design-Build
  • D-B-B: Design-Bid-Build
  • DBE: Disadvantaged Business Enterprise
  • DOL: Department of Labor
  • DOT: Department of Transportation
  • DUNS: Dun & Bradstreet
  • DVBE: Disabled Veteran Business Enterprise
  • EPA: Environmental Protection Agency
  • FS: Financial Statement
  • FYE: Fiscal Year-End
  • GC: General Contractor
  • GAI: General Agreement of Indemnity
  • GIA: General Indemnity Agreement
  • GMP: Guaranteed Maximum Price
  • GP: Gross Profit
  • HUBZone: Historically Utilized Business Zone program
  • HUD: Housing and Urban Development
  • HVAC: Heating, Ventilation, and Air Conditioning
  • IBEW: International Brotherhood of Electrical Workers
  • ILOC: Irrevocable Letter of Credit
  • JOC: Job Order Contract
  • LEED: Leadership in Energy and Environmental Design
  • M: Thousand
  • MM: Million
  • NAICS: North American Industry Classification System
  • NASBP: National Association of Surety Bond Producers
  • NP: Net Profit
  • NQAA: Net Quick As Allowed
  • NTP: Notice to Proceed
  • NWAA: Net Worth As Allowed
  • OH: Overhead
  • P&L: Profit and Loss Statement
  • PM: Project Manager
  • P&S: Plans and Specs
  • PE: Professional Engineer
  • PFS: Personal Financial Statement
  • PPE: Personal Protective Equipment
  • RFB: Request for Bid
  • RFI: Request for Information
  • SAA: Surety Association of America
  • SBA: Small Business Administration
  • SDVO: Small Disadvantaged Veteran Owned
  • SFAA: Surety & Fidelity Association of America
  • SIO: Surety Information Office
  • USGBC: United States Green Building Council
  • VE: Value Engineering
  • VOSB: Veteran Owned Small Business
  • WBE: Woman Business Enterprise
  • WCAA: Working Capital As Allowed
  • WOH: Work on Hand
  • WIP: Work in Process

Brought to you by the cool kids at FIA Surety: Site, Subdivision and Contract Surety Bonds PDQ!

First Indemnity of America Insurance Company
2740 State Route 10 West, Suite 205
Morris Plains, NJ 07950-1258
(973) 541-3417 Direct Dial

A carrier providing A Rated, T listed bonds in all states

Surety: What is the D:E ratio? (& Y do U care?)

This ratio is an aspect of surety underwriting that is important because it can affect the availability of both surety bonds and bank credit. Let’s learn about it.

The company Balance Sheet (BS) is a one-day snapshot of the money in the company (Assets), and who owns it (Liabilities.) It is the same money viewed from two different directions.

The last section on the liabilities side is the Net Worth (may be called Stockholders Equity.) It is the portion of the asset dollars owned by the founders and investors of the company.

The Total Liabilities shows the amount of the assets dollars owned by 3rd parties creditors, such as the bank (mortgage or equipment loans) or suppliers on accounts payable.

D:E stands for Debt to Equity. It measures the balance between these two groups of creditors. As the 3rd party creditors increase, the company becomes “more leveraged,” less creditworthy. Eventually the banker will say, “We can’t give you a loan because you are already carrying a lot of debt.” The surety underwriter may say “The Net Worth is too low.” It’s means the same thing…

Next question: What is an acceptable D:E Ratio? When is it not a problem?

Analysts generally look for a ratio not in excess of 3:1 or maybe 4:1.
At 4:1, the Total Liabilities would be 4 times greater than the Net Worth.

The D:E Ratio a sign of financial health and successful management. All analysts use it, and it’s easy to “eyeball.” Get in the habit of checking it, and you may see some wild numbers – a very good or a very bad sign! Good to know.

Are we Surety Bond Geeks? Well, we love this stuff so. . . .

Brought to you by FIA Surety. Creative Surety Solutions since 1979!
A carrier providing A Rated, T listed bonds in all states

First Indemnity of America Insurance Company
2740 State Route 10 West, Suite 205
Morris Plains, NJ 07950-1258
(973) 541-3417 Direct Dial

Surety: “It’s Electric!”

A new world is coming, and “It’s Electric!” (Click for mood music)

That’s right. No more “Brum-Brum!!!”

So get with the program and position your surety production to seize this emerging opportunity.

Your uncle is spending b-b-billions on EV charging stations! It’s likely that the operators will need a surety bond. This may be a production opportunity in all states. Are you ready for it?

Contract bonds, too! Building the charging station facilities can be expensive, sometimes hundreds of thousands of $. Be ready to issue P&P Bonds for these specialty contractors!

These will be new bond clients, unfamiliar with the process. No bonding history. They may be new entities. You’re ready for them because you have FIA Surety, a carrier that has solved bonding problems for more than 40 years. We’re positive that you’ll be shocked at how our well-grounded underwriting serves your current needs!

It’s electric!

First Indemnity of America Insurance Company
2740 State Route 10 West, Suite 205
Morris Plains, NJ 07950-1258
(973) 541-3417 Direct Dial

FIA Surety: Providing A rated, T-listed bonds in all states!


What does that mean?

  • Strictly enforced underwriting requirements
  • Only call us during business hours, on our normal days (convenient for us.)
  • Our way or the highway…

Did you ever say that? Noooooooooooooo!

Because… the best surety is one that can actually listen and work diligently to provide flexible, creative surety solutions.

Enter FIA Surety. We’ve been handling surety problems (we call them “opportunities“) for over 40 years!

“I LOVE DEALING WITH FIA SURETY!” did you ever say that? Call us. You will!

First Indemnity of America Insurance Company
2740 State Route 10 West, Suite 205
Morris Plains, NJ 07950-1258
(973) 541-3417 Direct Dial

FIA Surety: Providing A rated, T-listed bonds in all states!

The Most Important Element in Surety Bonding Is…

  • Working Capital?
  • Net Worth?
  • Profitability?
  • Longevity?

What is the SINGLE most important element that underwriters consider when reviewing a bond account?
What is the ONE most relevant factor applicants must have in order to qualify for surety bonds?

Each of the financial factors is important. It’s like how much gas you have in the tank. Low or no NQ or NW means you may not go far.

Profitability is how well the engine is running. Hear a funny noise? That could be a bad sign. These are all important, but they are not the ONE most critical factor.

The Answer:

If you were the underwriter, if you were betting your own money, would you rather back an applicant with lots of dough or one that was absolutely trustworthy? Think of it this way:

Billy shows a strong financial position, but has a history of tax liens.
Suzie has limited financial recourses, but her credit score is high.

Who do you go with? I would lean toward Suzie. Billy has the big bucks, but how do we know he’ll do the right thing with his $. Will he pay his invoices properly and avoid bond claims? Stay out of trouble with the tax collector? Do the right thing by us? Maybe he got his money by dealing dirty…

Suzie on the other hand can be trusted. She may qualify for assistance or support. Given the chance, this honorable person may succeed.

So, you could argue that the one most important element is the CREDIT REPORT. It is objective, current, third-party info that reveals the applicants character. It helps the underwriter identify trustworthy applicants, people who honor their obligations.

Without that, you have nothing.

FIA Surety is a carrier that provides A rated, T-listed bonds in all states!

Need a Contract, Site or Subdivision Bond? We’re waiting to serve you. Call 856-304-7348

Surety Bonds: “How much are pork chops?”

“Our pork chops are on sale today, only $.89 a pound!
But we’re all out of them…”

It’s a fact, when you’re out of capacity, whether it’s pork chops, gasoline or surety bonds, you ain’t goin’ nowhere…!

In todays highly active bidding market contractors need enough capacity to pursue multiple contracts while they wait for bid results and contract awards. That’s where we come in!

FIA surety is a carrier that has the attitude and flexibility to provide what’s needed. And we’re small enough for you to talk directly with the decision makers. That’s been a key to our success all these 40 plus years.

We provide A rated, T-listed bonds in all states.

Call us for Site, Subdivision and Contract Surety Bonds: 856-304-7348
FIA Surety: We Get It Done!

FIA Surety / First Indemnity of America Insurance Company, Morris Plains, NJ

Call us for Site, Subdivision and Contract Surety Bonds: 856-304-7348

Meet the “Frankenstein* of Bond Forms”

Cut, chop, sew, staple. Hmmmmm… THAT looks nice!

(Click for mood music!) You take a regular Payment Bond that provides protection downstream for providers of labor and material. Then you make it go the opposite direction to give payment protect to the project owner or GC.

“We can remove his head and point it the other way!”

  • What is this “Franky Bond” and when do you use it?
  • How do you get one?

This creature is an Advance Payment Bond. You may run into one of these because they are part of the solution for contractors struggling to deal with rising material/equipment prices and long delivery dates. The bond enables contractors/subcontractors to collect payment before the items are installed, delivered to the job site or “suitably stored.” Such payments would normally not be contractually permitted – but our Franky Bond can make it happen. This enables the “Principal” (bond applicant) to collect funds, order the product and lock in prices. It may also help assure delivery at a time when the product is needed. Sounds great, but what is the underwriting? Are these hard to get?

A Performance and Payment Bond is not considered a “strict financial guarantee,” however the Franky Bond is. It is promising the proper handling of funds, or a claim can be made to recover the payment. You have to call that a financial guarantee. Such bonds are approved based on the good financial condition of the applicant.

Even when the principal has filed a Performance and Payment Bond, the Franky Bond may be required to facilitate payment outside the terms of the contract.

So there you have it. There’s always something new in the surety business!

* Don’t call him Frankenstein, he is “Frankenstein’s monster.”
* Do call us when you need a Franky Bond – for Advanced Payment on a construction contract.

FIA Surety: A carrier that provides A rated, T-listed Site, Subdivision and Contract Surety Bonds in all states!

Steve Golia: 856-304-7348


Article by Tyler Dunn at Weissman PC (

Georgia law allows for those providing labor or material for a construction project to file mechanics or materialmen liens (“M&M Lien”) against the property in the real estate records for amounts claimed for that labor or material. Faced with an M&M Lien, builders often feel they have no alternative but to settle an unsubstantiated lien claim or pay to bond it off the project. A few ways to protect against M&M Liens are discussed below.

  1. Final a Notice of Commencement

An owner can get some significant protection from M & M Liens by filing a “Notice of Commencement” and posting it at the project site. The Notice of Commencement must be filed no later than 15 days after commencement of work on the project and must contain specific identifying information prescribed by Georgia law. A copy of the Notice of Commencement must be provided to any subcontractor who requests it in writing. If a Notice of Commencement has been correctly filed and posted, a subcontractor must then provide a “Notice to Contractor” to the owner or contractor within 30 days after providing work or material, thus alerting parties that it is involved in the project and to what extent. The Notice to Contractor gives the owner/contractor the opportunity to make sure the sub-sub is paid, thereby avoiding a possible M & M Lien from that subcontractor. If the Notice to Contractor is not timely provided by the subcontractor, it’s M & M Lien rights automatically terminate.

2. Obtain Lien Waivers

Statutory interim and final lien waivers should be signed by potential M & M Lien claimants when interim and final payments are made to them. It is essential that correct waiver forms be used since other types of forms are generally ineffective and unenforceable. The valid forms of interim and final lien waivers in Georgia were revised in 2021 and these current forms must be used. Ideally, interim and final lien waivers should be obtained from all subcontractors and suppliers. Further, when the final payment for the project is made, the general contractor should sign a “Final Affidavit and Lien Waiver” stating that all subs and sub-subs have been paid.

3. Consider Contracts with Subcontractors

Written subcontracts between builders and their subcontractors can also protect against M & M Liens. While not the norm, these contracts can protect builders by including provisions that directly address M & M Liens. To ease the task, a builder can sign a master subcontract applicable to all projects with each of the customary subcontractors.

(Note from Golia: Florida is one example of a state with similar requirements. Look up “Florida 2021 Statutes, Title XL, Chapter 713” for details.)

Does YOUR state have similar requirements for lien filers? Let me know and I’ll add your comments below. “

FIA Surety: A carrier providing T-listed, A rated Contract, Site and Subdivision bonds in all states!

FIA Surety / First Indemnity of America Insurance Company, Morris Plains, NJ
Need a bond? Call now! 856-304-7348

Surety Challenge: Thorny Problem

Solve this real surety case:

A large subcontract has been awarded and no Performance & Payment Bond was stipulated. The sub commenced with the work but their major vendor is holding up the entire project – they want their purchase order (PO) “bonded.”

What are the possible solutions?

More details: The subcontract is for $4 million and the vendors purchase order is $600,000, about 15% of the subcontract.

What is your solution?

Some possibilities:

  1. Your idea:_______________________________________________________________________________
  2. Issue a $600,000 Performance Bond on the purchase order or maybe a Payment Bond
  3. Provide a P&P bond on the entire contract, or just a Payment Bond
  4. Use Funds Control to assure the vendor that their payments will be processed smoothly, without interruption.
  5. Use Joint Checks to assure that the sub cannot divert the vendor’s payments.
  6. Issue a new contract equal to the purchase order and provide a Payment Bond to the vendor.


#2. Bonding the purchase order would be a financial guarantee obligation (pay money at a future date), very tough. Underwriters might want collateral.

#3. This is an impractical solution because the PO is such a small percentage of the subcontract – makes it appear extremely expensive (premium based on the contract amount.)

#4. Could work although the vendor has no recourse if the payments are held up.

#5. Same problem with joint checks.

#6. If the contract owner will agree to make these adjustments, it could be the best solution. A Payment Bond would be issued on the new contract and furnished to the vendor.

Was YOUR solution on the list? Let me know if you have one to add:

FIA Surety, your best carrier to solve “thorny problems.”
Call us for T-listed, A rated Contract, Site and Subdivision bonds in all states.

FIA Surety / First Indemnity of America Insurance Company, Morris Plains, NJ
Need a bond? Call now! 856-304-7348

Comments from reader:

Steve, This may touch upon your solutions #2 and/or #6, but I was thinking along the lines of issuing a $600,000 Advance Payment Bond covering the PO contract between the Sub (Principal) and Supplier (Obligee). A new supply contract covering the PO would likely need executed between those 2 parties, but not necessarily impact the existing contract between the GC and the Sub.

Golia reply:

OK, yes, good thoughts!

Couple of issues: While the advance payment bond would help the vendor, it would be priced and underwritten as a financial guarantee (tough) b/c the principal is paying the obligee, not the other way around (as on a P&P bond.)

A supply contract bond will have the vendor as the principal, so that will not satisfy their need.

Pretty thorny, right?  Actually this exact situation comes up from time to time.  If the PO amount is substantial in relation to the contract, issuing a Payment Bond on the entire contract could be the economical solution, then you just give a copy of the bond to that one vendor.  They should be happy to hold a bond that is for more than their PO amount.