Measure 4" down from the top of one of the main pieces. Center the circle template on the 4" mark. Trace around template using a pencil or sewing pen.
Cut out the hole.
Pin bias tape around the raw edge of the circle opening.
Stitch bias tape to the bag opening.
Fold each loop piece in half so that it is 1.5" wide with the right side of the fabric on the inside. Press on the fold using an iron.
Stitch the side edge of each loop piece. Turn right side out. Press flat with an iron.
Top stitch the sides of the loop piece, leaving the ends open.
Place the other large rectangle of fabric on your work surface with the right side of the fabric facing you. Fold each loop in half with the raw edges matching. Place each loop onto the top of the rectangle, matching raw edges, 3/4" away from the side edges. Pin each loop into place.
Place the other large rectangle (with the hole) on top, sandwiching the loops in the center of the two large rectangles. Make sure that the wrong side of the fabric is facing you. Pin around all 4 sides of the bag.
Sew around all 4 sides of the bag using a 3/8" seam allowance (line up the pressure foot with the edge of the fabric). When you reach a corner, leave the needle in the fabric, lift up the pressure foot and pivot the fabric until it lines up again. Lower the pressure foot and continue sewing.
Trim corners and turn the bag right side out through the center of the hole. Iron the bag flat.
Top stitch around all 4 sides.