SURETY: Never Anything New, except maybe this…

There’s NOTHING NEW in Surety, except maybe this: “Runway”

Investors are familiar with the concept. It estimates how long a start up can operate on it’s initial capitalization. I apply this to surety analysis, as well.

Underwriters calculate Net Quick as an indication of future cash flow. NQ will be used to finance the start of new contracts and may solve problems on existing ones.

Under Worst Case circumstances, NQ will fund company opeations in the absence of new revenues. The unaviodable, future costs of operating are called “overhead,” or General and Administrative Expenses on the Profit and Loss statement. The ratio between the expected cash flow and the typical overhead will show the staying power or length of “Runway” for the company.

How to Calculate Runway on a Surety Account

On the last company fiscal year-end financial statement, find the average monthly overhead expenses. For example, on a Profit and Loss Statement covering a 12 month period, divide the General and Administrative Expenses by 12. Now you know the average monthly expense it costs to keep the lights on, pay the office salary, insurance charges, etc. These expenses arise even when the company has no active projects (no new revenues). Let’s say the average monthly overhead is $100,000.

Next, we divide the Net Quick by the monthly OH. If the NQ was $400,000, 400,000 divded by 100,000 = 4, meaning (theoretically), in the absense of any new revenues, the company can run for four months covering ongoing expenses with the expected cash flow (NQ).

In an ongoing business, there are many other factors to consider. But Runway is worth knowing and tracking because it is a measure of the client’s staying power. And that’s something we always want to know about.

Steve Golia

Also worth knowing, FIA is a carrier providing A rated, T listed bonds in all states: Contract, Site & Subdivision Bonds. We’re problem solvers!

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

Learn about our Free CE School here.

Surety Bond Underwriters

They’re tough!

“We have rules, and that’s it!

It can be frustrating when you need a surety bond, especially if you are not a Super-Expert.

That’s where we come in: FIA Surety! We are the carrier you can actually talk to. We provide A rated, T listed bonds in all states, and we work hard to approve the business.

Bubbles and Butterflies: It’s not just a big party over here. We DO underwrite the business. (Our L/R is extremely low) But our agents know we work hard to make them look good. Read our reviews (here), then do yourself a favor:

Call us with your next surety opportunity, including Contract, Site & Subdivision Bonds!

FIA Surety / First Indemnity of America Insurance Company

2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

Learn about our Free CE School here.

Surety: Free Book Supplement

Free: More than 150 Bonding Tips & Fixes!

Love the book?

Now there are more than 150 Surety Tips & Fixes to add to your problem solving arsenal! Simply send in your picture holding the book, and we’ll promptly email the free book supplement. Email to “”

Need the book? Hurry, we only have a few more left. (JK!!!) The Secrets of Bonding


Complicated Subdivision Bond ISSUED!

You may never have seen a case quite like this one…


  • Applicant needed a multi-million dollar maintenance bond for work installed under a subdivision development agreement.
  • The construction phase was already bonded by another surety and completed. They could not provide the required multi-million dollar maintenance bond.
  • Applicant provided a recent fiscal year-end statement with a negative $900,000 Net Worth and a $1 million+ Net Loss
  • “Compilation” financials for a bond over $3 million
  • The municipal obligee required a straight seven-year bond term for 100% of the construction amount.  (Rolling your eyes yet?)

How did FIA Surety put this together?

  • We verified the Compilation financials based on our “audit” of supporting schedules.
  • We restructured the Net Worth analysis by arranging the subordination of a major loan.
  • We worked with their CPA to evaluate the profitability of their current fiscal year.
  • We verified the warranty in the underlying construction contract.
  • We conducted a negotiation with the obligee resulting in a revised contractual obligation for the Principal, and they accepted a revised bond form written by our legal department – with a shorter term, and permitting non-renewal by FIA Surety.
  • We obtained the obligee’s written acceptance of the work in place.
  • We conducted a prior surety check with the incumbent carrier.

Complicated? Yes.

Difficult? Yes

Unusual? NO! Not for us. FIA Surety is known for getting deals done, even the hard ones.

If this is the level of service and expertise you want on Your bonding opportunities…. Call Us on the next one! 856-304-7348

FIA Surety / First Indemnity of America Insurance Company

2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

Providing A rated, T listed bonds in all states!

Surety: Jelly of the Month Club?

The Gift That Keeps Giving!

OK, the Jelly of the Month Club is AWESOME, but that’s not what we’re talking about…

A few of the actual comments from our 12/1/22 FIA SURETY “Free CE” Zoom webinar on Commercial and Miscellaneous Bonds:

  • As always, very informative. Thanks.
  • Great course!
  • Very informative
  • Interesting Course
  • Very good course! Thank you Steve
  • Thanks Steve, very informative!
  • Very helpful, thank you Steve!
  • Thank you Steve. I liked your course. Lots of info!
  • Great overview of Commercial Surety. Thanks Steve
  • Always learn something in your classes!
  • You’re very knowledgeable. Thanks!
  • You were very informative and patient. Thank you for the class.
  • Enjoyed the course, very informable.
  • As someone new to Surety this was very informative. Thank you
  • Very informative! Great course and great job.
  • Appreciate the detailed information in your courses, Steve – Thank you!

Our Free CE courses are not only the best / free place to learn about surety, they are also CONVENIENT (attend from home or office) and this gift keeps giving! The course info is all practical stuff you can use, boost your career, serve your clients better (maybe even make MORE MONEY!)

Face it, this is way better than jelly!

To date we have provided more than 2,000 hours of Free CE education worth over $25,000 in the regular market. AND we just rolled out our schedule for the first quarter of 2023. More great stuff you can use: Click for info!

Find out what you’re missing. Join us.

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

A carrier providing A rated, T listed bonds in all states!

Confusing Surety Stuff – SOLVED!

Here is a great question that came up during one of our training sessions in the office:

What’s the difference between an Irrevocable Letter of Credit, a Line of Credit and a Set-aside Letter?

Letter of Credit

This document is also referred to as an “ILOC,” a Letter of Credit or a Standby Letter of Credit. They are a commercial bank customers undistributed loan payable to a designated 3rd party. Wow, THAT explains it!

Here is an example: Elon is entering into a contract that must be secured. It could be a construction contract that requires either a Performance Bond or an ILOC. The instrument is needed by Elon and he is the applicant and paying for it, but the beneficiary is the other party in the contract, LaFawnduh.

The instrument says that if a default occurs the beneficiary can seek recovery via that instrument. LaFawnduh, can send a demand letter to the bank which will be obligated to send funds. It will be recorded as a loan to Elon.

Line of Credit

This is simply a credit facility, such a a home equity loan or Working Capital Loan for a business. The applicant / borrower can draw out funds when needed. A loan document governs the transactions.

Set-Aside Letter

This is an agreement executed by a bank regarding a customer they share with a bonding company. The bank is loaning money to the client to fund a project guaranteed / covered by a surety bond. This could be on a subdivision, where the borrower must self-fund the cost of construction.

In the event of the demise of the borrower, the set-aside letter promises to keep the loan in play so the surety has a source of funds to finish the work.

Now, was that so bad? All three concern the handling of money, but for different purposes.

Want to solve more bonding stuff? Call us with your next Contract SuretySite or Subdivision Bond. We’re problem solvers!

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

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

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