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Federal loans saved Colorado salons last year. But now other economic forces are cutting their profits.

Salons were among the top industries to apply for federal PPP loans in Colorado. They’re also among the smallest of the small businesses, with few resources to navigate the COVID recovery.

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When Deseo Salon and BlowDry in Denver was forced to close for two months in 2020 due to the coronavirus pandemic, owner Sherry Velarde didn’t know what was in store for the future. 

Like hundreds of thousands of Colorado businesses, Velarde applied for a federal Paycheck Protection Program loan, the popular COVID-19 relief aid for small businesses. If the loan was used to pay workers, it was eligible for 100% forgiveness. She said the application process went smoothly for her and there were no roadblocks. 

“I have a relationship with my bank, and also the bankers there, and so they had it set up pretty nice,” Velarde said. 

Owner of Deseo Salon & Blowdry Sherry Velarde rinses a client’s hair on Wednesday, August 18, 2021, in Denver. Velarde started Deseo in 2015 and struggles to hire new staff as the pandemic continues – though stylists and front desk workers are paid generously, Velarde said. “People just won’t show up to interviews.” (Olivia Sun, The Colorado Sun)

But in addition to utilities and rent, Velarde spent most of the $120,000 loan on marketing to new customers and trying to attract new stylists in what has become a competitive labor market. PPP rules changed over time, allowing business owners to use more of the funds on items beyond payroll.

“Frankly,” she said, “we haven’t been able to get people to come back (to work). It’s been crazy.”

MORE: More than half of Colorado’s $15.1 billion Paycheck Protection loans have been forgiven. Here’s the list.

The economy has rebounded significantly in the past year as jobs have increased and unemployment has steadily declined. Nearly 150,000 small businesses in Colorado received a PPP loan, and about one third of those same companies applied for a second one. That helped infuse $15.1 billion into the state’s economy and keep 1.6 million workers employed, if only temporarily.


But the PPP funds were meant to last only two months and the pandemic has gone on much longer. Small businesses have been dealing with new challenges all year, from difficulty finding enough workers to dealing with the rising coronavirus delta variant. 

Colorado’s economy has made progress in the past year and the state’s gross domestic product is expected to reach full recovery by the end of the year. The number of people on unemployment has declined and hit a pandemic low of 6.2% in July, though there are still more than 100,000 Coloradans collecting federal unemployment benefits, which end Sept. 4. Nationwide, the U.S. Department of Labor said 943,000 jobs were added to the market and the unemployment rate fell to 5.4% last month. 

“We have done a marvelous job in the last 12 months or so, but what the next 12 months are going to give us as a challenge is in a way, everybody’s guess,” said Kishore Kulkarni, professor of economics at Metropolitan State University of Denver. “But in a way the effect of this delta variant will be nowhere close to the effect of the first shockwave.”

>> Search all of Colorado’s PPP approved and forgiven loans.

Dealing with the delta

Michaela Cox, the owner and sole employee at the Suite Spa in Aurora, said having to temporarily close her spa due the coronavirus pandemic almost shuttered her fairly new business last year. 

Although she’s found a way to survive this new normal, she’s afraid the emergence of coronavirus variants will halt all of her progress. The delta variant has some of her clients worried about visiting a business where close-contact is required, and business has slowed down as a result. 

“I’m still trying to recover from everything that’s happened, and then we’ve got a new delta variant, you know, and that’s a whole new thing that I have to worry about, that’s kind of slowing things down,” Cox said. 

Beauty salons and spas, in particular, were especially impacted by COVID-19 business closures and social distancing. According to public data provided by the Small Business Administration, 4,510 beauty salons in Denver received more than $22 million in PPP loans in 2020 and 2021. As an industry, beauty salons ranked fourth highest for the number of PPP loans in both the first and second loans rounds.

Cox was grateful for the $3,821 PPP loan she received last year, but she wishes it could have done more to help with other expenses. Cox also said the government should have made the application process easier for smaller businesses to navigate. 

“I mean, it wasn’t easy at all. I would say that it kind of made you feel like there was a trick to even getting a piece of anything,” Cox said about the PPP application. 

With little to no guidance on how to apply for the loan, Cox resorted to joining Facebook groups and other online forums for help. Once she finally figured out how to apply, the next challenge was avoiding potential scammers posing as banks. 

All in all, it took almost two months for her loan to arrive, and the money was spent the moment it was received.

“Once you get done with your back rent, you buy a couple products, you’re done,” she said. “And then you’ve got to hope and pray you can make enough in that month to cover your rent. So it was just a lot, and still is a lot.”

Finding employees

Business at Deseo Salon has returned to where it was before the pandemic. However, Velarde said there are so many new clients, the salon doesn’t have enough stylists for them. 

Although Deseo is a business that has used PPP loans to help add jobs to the economy, Velarde has had trouble finding people to take these jobs. Before the pandemic, the salon had 11 employees and last year, Velarde had to replace six employees during the pandemic. She said some of them decided not to return due to the unemployment benefits they were receiving. Right now, the salon is in need of five more employees. 

Owner of Deseo Salon & Blowdry Sherry Velarde rinses a client’s hair on Wednesday, August 18, 2021, in Denver. Velarde started Deseo in 2015 and struggles to hire new staff as the pandemic continues – though stylists and front desk workers are paid generously, Velarde said. “People just won’t show up to interviews.” (Olivia Sun, The Colorado Sun)

“It’s been really hard to get people to come back. And we offer by far, like, the highest pay in the industry, we pay their health insurance in full. We pay for paid time off, we have 401(k), we also pay a ton for marketing to retain new clients and get new prospects,” Velarde said. 

Velarde decided to offer these benefits last year in an attempt to retain employees. She hopes that increasing compensation and providing new benefits will let current and future employees know she cares about what is important to them. 

She believes the PPP loan she received fulfilled its purpose and didn’t apply for a second one. The last day to apply was May 31. 

The end of PPP

Kulkarni said although the PPP loans helped the economy overall, he believes government assistance will not be given so fast and at such a great volume again, because it could set a dangerous precedent for the economy. 

“We cannot have a sustainable policy of giving out the money to the people all the time. There are consequences of that, money has to come from somewhere,” he said. 

To prepare for the upcoming variants, Kulkarni suggests that small businesses begin looking for other ways to borrow money just in case.  

“If I’m a small business person, I will start looking for short-term loans so they will find out who can help me on the government level as well as in any other way, and I start managing that just in case the shock gets worse, I better be ready” he said. 


Cox is still paying interest on her loan and isn’t sure if it will be forgiven yet. Because of this — and the complicated application process — she reluctantly decided not to apply for a second PPP loan. 

“It takes so long for you to even get it,” Cox said. “I didn’t know what my payback status was going to be and I just didn’t want to take out another one.”

Colorado Sun staff writer Tamara Chuang contributed to this story.