The features of turbulence modulation produced by a heavy-loaded suspension of small solid particles or liquid droplets are discussed by using a physically based regularization of particle-fluid interactions. The approach allows a robust description of the small-scale properties of the system exploiting the convergence of the statistics with respect to the regularization parameter. It is shown that sub-Kolmogorov particles or droplets modify the energy spectrum, leading to a scaling law, , that emerges at small scales where the particle forcing balances the viscous dissipation. This regime is confirmed by direct numerical simulation data of a particle-laden statistically steady homogeneous shear flow, demonstrating the ability of the regularized model to capture the relevant small-scale physics. The energy budget in spectral space, extended to account for the interphase momentum exchange, highlights how the particle provides an energy sink in the production range that turns into a source at small scales. Overall, the dissipative fluid-particle interaction is found to stall the energy cascade processes typical of Newtonian turbulent flows. In terms of particle statistics, clustering at small scale is depleted, with potential consequences for collision models.