Owing to the increase in renewable energy, microgrids (MGs) are increasing. A MG has a small loop-type grid configuration. In the loop MG, challenges in protection such as maloperation of protection relay may occur owing to bidirectional current flow. Herein, we propose a new protection scheme in the loop MG. Considerations for protection in loop MG and fault characteristics are analyzed. Based on these, a new index to solve the considerations for MG protection are proposed using a wavelet transform. Furthermore, the new protection scheme based on the coordination with tie switch using the proposed new index is proposed. To verify the proposed scheme, the MG and the proposed scheme are modeled using the electromagnetic transients program and MATLAB. Various simulations according to the fault location and the success/failure of fault section separation are performed. Simulation results indicate that the power supply on the original feeder can be maintained by proposed method.