My thread on the bottom of the material is in small loops. What am I doing wrong?

Machine incorrectly threaded. This is easy to do even with experienced sewers. Wrong needle, thread or material combination. Make sure the thread is not old and is the correct for the material and the size of needle Make sure the needle tension is correct for the material etc. :-)

wrong bobbin tension , but amazingly its actually easier to adjust the top threads tension to compensate for it , use your tension knob to slowly adjust , try an inch , slowly adjust try an inch , and so on to get a top and bottom thread tension to match , this will need to be adjusted for each major change in fabric (aka , knits to woven )

the looping on the bottom usually is a tension problem, the top & bottom tension are unequal usually fixed by adjusting the top tension.
some people that I've talked with have had success with changing to a different size needle ( depends what type of thread is being used).
when the machine is threaded the foot needs to be up ( this releases tension on the thread), when the foot is lowered it the tension is set on the thread. if the material being sewed is too thick it raises the foot too high & releases tension on the thread ( the material has to be really thick to do this).
if there a piece of thread or lint in or around the tensioner or bobbin area it could cause trouble.
other wise if you've tried everything you can think of, take it back th the store & have them try it & tell you what is wrong.

also this machine has bad reviews (i'll provide a link so you can read them), people having the same problems as you are. the newer singers just don't seem to be the same quality tha the older ones were.
all bad reviews
http://www.amazon.com/Singer-5400-60-stitch-Sewing-Machine/product-reviews/B007ZG9DTQ/ref=cm_cr_pr_btm_link_1?ie=UTF8&showViewpoints=0&sortBy=byRankDescending
mixed reviews
http://reviews.walmart.com/1336/20573406/singer-5400-sew-mate-60-stitch-sewing-machine-5400-reviews/reviews.htm

It's most likely not the machine. It's the other things, ie needle, thread, etc. combination. For sewing knit, be sure to use a ball point needle. The needle eye size is important to so the thread is neither too small nor too large for the thread weight.

FWIW, it sounds like bird nesting. --the thread is not seated completely in the tension disk. Remove the top thread from the machine and ALWAYS RAISE the presser foot when rethreading!

Also, check that the tension is appropriate for the project. The two threads should meet in the middle of the fabric. If there is top thread showing on the underside of the fabric, the top tension is too loose. Tighten it until it until the top thread pulls the bobbin thread up into the fabric.

All About Needles SCHMETZ Needles

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Hi Karen:

Take a deep breath, count to 10... then slowly let it out. Ok. now. Most industrial machines are basic mechanical machines. Not much to go wrong with them. But they are so basic the manufacturers figure you would almost automatically know how to thread and adjust them.

There are a few things you can check.

I assume you got the needles when you got the machine. Did you know that some machines require left or right twist on the thread? Yes, I know... "Huh?" So first lets make sure your needle and thread match well.

Cut off a length of thread abotu 18 inches long. Take out your needle and thread the eye of the needle. Now hold one end of the thread up... does the needle slowly go down the thread? If it goes fast the eye is too big for the thread. If it slips and stops... the eye is too small for the thread. In either case you need different needles for this thread.

Next, In your instruction book... really study those pictures. Almost all machines require that the bobbin be inserted with the thread unspooling off the bobbin in a certain direction. Insert it wrong and it does strange things with tension and your loop.

Next... make sure you have threaded it correctly. This means lifting the presser foot lever while threading... make sure you are in between those tension discs. (I've had a machine that required that I wrap it 1.5 times around a tension disk... so make sure you are really studying those diagrams.)

Remember. Loops on bottom of material mean top tension is too loose. Loops on top of material means top tension is too tight and perhaps the bobbin tension needs adjusted (loosen top tension first!)

I hope you got the servo motor instead of the clutch motor.

Good luck

Loops on bottom indicate a top thread tension problem.

Make sure needle is the correct size and not bent or broken
Make sure it is threaded properly with the lever UP.

Do a test stitch.

If it still loops below... tighten the top tension and do another test stitch... keep doing this until the stitch is balanced.

BTW... always grasp and hold both threads when starting a seam.

the thread tention is wrong

Loops on the top of the fabric are usually caused by the bobbin thread not in the bobbin case tension correctly, remove the bobbin and reinstall it. You should feel a slight resistance when you pull on the bobbin thread.

Blue red green yellow threading order is very important. Pull all threads from eye of the needles and both lower loopers and thread in that order.

Sounds as though you've misthreaded the upper tension. The best way to verify this would be to thread your machine, lower the presser foot on to the material. Now try pulling the thread through the needle. (Assuming your upper tension dial is set to a number greater than one). You should feel resistance. Should you not feel resistance, rethread your upper tension.