You cannot use a LOOP expression in a WHERE clause. The WHERE clause expects to see only conditional expressions.
You can build the SQL statement in a variable, use the LOOP clause to build up a WHERE clause with multiple OR expressions, then use EXEC to execute the built SQL Statement. The resulting statement would look something like this:
SELECT Products.P_ID
, Products.P_Title
, Products.P_ActiveFlag
, Products.Delivery_Flag
FROM Products
INNER JOIN Cities on Products.P_ID = Cities.P_ID
WHERE Products.P_ActiveFlag = 'true'
AND (
Products.P_Title LIKE '%SearchTerm0%'
OR Products.P_Title LIKE '%SearchTerm1%'
OR Products.P_Title LIKE '%SearchTerm2%'
OR Products.P_Title LIKE '%SearchTerm3%'
OR Products.P_Title LIKE '%SearchTerm4%'
)