Now you can run the FHE step for as many times as the algorithm requires, giving you a FHE-VM that can execute any WebAssembly program from your favorite Turing complete programming language.
The limitations are that you need to define a bounded machine state, which technically breaks the Turing completeness. In practice this is no different from your laptop having a finite amount of memory which disqualifies it as a Turing machine. Real Turing machines don't exist.
The other limitation is that the FHE executor can now see the total run time of the algorithm, which was secret before. This is similar to a timing side channel and similar mitigations apply.
As others have pointed out, if you have a concrete algorithm you can do something much simpler than implement a VM. The Collatz sequence is good toy example of an algorithm with unknown loop bounds. You would make a FHE circuit that iterates a single step using the same overall design.