Ideas
I encountered this issue today. Formerly a RR but changed to Residential to build, with sim living on lot. When setting up the small business, was unable to select the home lot. Went into World View and evicted my sim. Entered the lot, bulldozed and assigned it to Generic. Went back into World View and it showed my sim still owning the business and my only option was to sell the business, despite evicting, bulldozing and it being the Generic lot type. After evicting, it showed my sim STILL living there. I evicted once again. At this point I place my residential build that I had saved to the gallery which prompted me to change lot types (from Generic to Residential) and I then moved my sim back. At this point I was able to select the lot as expected as a Small Business and everything functioned correctly. The issue seemed to be that the game still thought my sim 1. owned a business on the lot despite evicting and 2. after i sold the business via World View that my sim still lived on the lot.