Hi Maria,
Best practice is the VMs or the App Servers should always point to the Domain Controllers and they are the DNS servers so no need to add loopback IP address as they will not resolve records for the app or server.
Hope this helps.
JS
== Please accept as answer and do a Thumbs-up to upvote this response if you are satisfied with the community help. Your upvote will be beneficial for the community users facing similar issues.