My first one I put the handles right at the edge like the diagram shows, but they pulled out so I moved them up about an inch and then after sewing in the lining and pulling it right side I top stitched the top of the bag there for the handles got stitched in good. I would do the same for the loop. In fact I tacked mine on the outside of the bag instead of pinning them and then stitched in the lining. Good luck, Huggies, Fay