I cut out my squares of burlap by tracing a sheet of paper and tore a long strip of a canvas drop cloth that I had already. You can use any kind of fabric or ribbon for this.
Hot glue the squares to the fabric banner.
Stencil the letters onto the burlap with craft paint and a sponge or brush.
I ripped pieces of canvas cloth and tied them around the banner between the letters.
Fray the ends and the sides as much as you want to.