http://www.jsc.nasa.gov/history/flag/flag.htm
Two other major constraints were the weight of the assembly and the stowage space required. The team designed the entire assembly to be as lightweight as possible -- when completed it weighed only 9 pounds and 7 ounces. They reduced the size of the package by developing a two-part telescoping pole apparatus with a telescoping crossbar. It was also necessary to design a flagpole that could be easily assembled and deployed by astronauts wearing space suits. Space suits used for the lunar surface EVA were pressurized to approximately 3.7 pounds per square inch and, as a result, the amount of force that the astronauts could apply with their gloved hands was limited and their range of movement was restricted (Fig. 3).
Sketch of an astronaut's reach constraints. Fig. 3. - Astronaut Reach Constraints. (NASA Press Release 69-83K, p. 122)
A 3 x 5 ft. nylon flag, obtained through the government supply catalog, (footnote 10) was altered by sewing a hem along the top. The crossbar, hinged to the pole, went through this hem, and a loop sewn around the bottom of the flag secured it to the pole. An astronaut would unfurl the flag by extending the telescoping crossbar and by raising it first to a position just above 90 degrees. He then lowered it to a position perpendicular to the pole where a catch prevented the hinge from moving. The upper portion then slipped into the base portion of the flagpole, which had been driven into the ground using a lunar geological hammer. A red ring was painted around the base of the assembly 18 inches from the bottom to aid the astronauts in judging the distance that the pole had penetrated the surface. (footnote 11)
Finally, it was necessary to protect the flag during the descent portion of the lunar landing. To make the flag easily accessible during the EVA, it was mounted on the left-hand side of the ladder on the Lunar Module (LM) (fig. 4).
It seems it was just a loop... I don't know it seems still a bit puzzling to me