Packet loss is normal for a congested link and it functions as the most widely recognized signal of congestion. SQM judiciously employs smart early packet loss in order to let the machines sending and receiving TCP streams detect the congestion so that their congestion control algorithms can kick in. Bufferbloat was caused by designers of networking hardware (wrongly) thinking all packet loss was bad and trying to avoid packet loss at all costs.
Today there is a TCP/IP protocol enhancement called Explicit Congestion Notification (ECN) that allows networking hardware to explicitly notify devices that a link is congested, without resorting to the age-old method of dropping packets to signal that congestion is happening. All modern OSes support ECN, but not all have it enabled for all connections by default. If you enable ECN on all your devices' TCP/IP stacks (and the TCP/IP stacks of all the other servers/peers/hosts they talk to on the Internet), then your SQM-capable networking equipment will be able to use ECN flagging on those connections instead of resorting to the old tried-and-true method of dropping packets to signal congestion.
The way to enable ECN varies from OS to OS, but for Unix-like OSes it generally involves using sysctl.
See https://www.bufferbloat.net/projects/cerowrt/wiki/Enable_ECN/