For both the handle and the loop you will need to press in half lengthwise and press in half again so it looks like this.
Fold so the raw edges are in the center of the inside of the strip and top stitch along the outside folded edge, making sure to fold under at both ends. 
The ends should look like this.
These are your finished handles and loops.
Make a knot on each end of the piece you will use for the handle. Bring up the sides around the end of the handle.
Sew the bag closed around the handle, your knot should be on the outside of the bag (my hand is over the inside of the bag.)
It should look like this!
Here is the bag with both sides finished.
Isn't it cute? See the inside of the outside of the purse?
This is what the inside center of the bag will look like.
Now for the loop. You will need to choose a button and that will determine the size of the loop you will need. It should close the bag and fit around the button. I realized that using a button with a shank meant I needed to put the button lower on the purse. When the loop goes around the shank it can pull up and then your bag will not be closed properly.
Once you determine the size loop you will need, sew it by hand to the point of the bag. Do this on each side.
Determine proper button placement so bag will close and sew on the button. Close the button and enjoy the purse!
You could, of course, put pockets inside and also a snap or velcro closure, if desired. I left mine open. You can make a larger purse by starting with a larger square, but your sewing measurements would need to be worked out accordingly. Please let me know if any of you choose to make one of these little bags! 
