This example is showing a towel with faux leather as the reinforcement. The hole is fairly large so I can put paracord through it easily. You can make them much smaller or larger.
A note on the pictures: The inside of the hole appears to be frayed, but this is not the case. You are seeing the 'fluffy' backing of the towel. These holes are specifically made to prevent frayed edges in them.
Step 1: Tools and materials
Very sharp and pointy scissors.
exacto knife (optional)
Something to push or pull material through a hole. I used a tweezers.
an iron to flatten out the material (optional)