RELATED: Shark attack on kayaker in Santa Cruz triggers beach closure
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However, sharks aren't stopping some surfers as they take advantage of the less crowded water.
Officials said no one is allowed in the water within a mile of Steamer's Lane.
The city imposed the ban on Tuesday morning after a shark attacked a kayak. The kayaker wasn't hurt, but the shark's jaw left a foot-long impression on the front of the kayak.
Surfers aren't scared, but they said the sharks have always been there.
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"If you're always focused on that, you're going to spend a lot of time on your couch finding reasons not to do what you love to do and if you want to do that, that's absolutely fine, but I don't think either of us are doing anything but honoring the animals in there, the grizzly bears of the sea," Burlingame resident Brently Johnson said.
Some surfers told ABC7 News sharks have always been in the water so fear is not a factor. However, some tourists are staying away and surfboard rental stores are seeing less customers.
An employee at Cowell's Surf shop told ABC7 News that business was down 40 percent Wednesday. And nearby restaurants are also noticing a downturn.
"It's probably decreased by about half and now that we're going into the weekend, it may pick up, but it may not," Picnic Basket employee Caylie Soon said.
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One tourist came into town not knowing people weren't allowed into the water until seeing the warning sign. "It scared me a little bit, but that was after I was in the water," Kansas City resident Will Helm said.
Anyone who violates the ban risks getting a $200 fine. The areas affected include the main beach, Cowell's Beach and Mitchell's Cove.
The ban is impacting nearby businesses that depend on the beach traffic, but they should get some relief soon, as the ban was set to be lifted Saturday morning.
UPDATE: On Friday officials announced that water activity restrictions were lifted a day early at 9 a.m. on Friday, July 14. Fire Department Marine Safety personnel confirmed that no shark activity has been observed in the area since the shark attack on Tuesday.