Supporting Small Businesses to Revitalize Downtown

The rise of hybrid work and a decline in tourism have lowered the daytime population that supports commercial activity in downtown San Francisco, creating challenges for small businesses, residents, and visitors alike. Meanwhile, the city’s notoriously complex regulations make it hard to open new businesses and expand existing ones.

SPUR identified a nimble way to change the dynamic: encourage small businesses, nonprofits, and arts organizations to locate downtown. We made the case that, with the right policies and programs, many vacant ground floor spaces could become affordable to small businesses and community organizations, and downtown could become a diverse, mixed-use hub that provides more jobs and opportunities for entrepreneurship.

SPUR researched the viability of providing permanently affordable spaces for small businesses and artists on the vacant ground floors of downtown buildings. Our report Small and Mighty recommended improvements to permitting processes and tax policies that could significantly reduce costs, making it easier for small businesses to open and expand downtown.

In 2024, then-Mayor Breed allocated $15 million to expand storefront vacancy programs and offer new small business grants and loans downtown. Voters also approved a new tax code that financially relieves small businesses by exempting them from the city's business tax. Additionally, the legislation waived first-year permit and registration fees and eliminated annual licensing fees.

In 2025, the city increased small business support with an additional $2 million for the Vacant to Vibrant storefront program and $1.5 million for small business services. Incoming mayor Lurie also simplified permitting, established five new entertainment zones for live entertainment and alcohol service, and eliminated sidewalk seating permits for small businesses.

Removing many small-business fees and licenses has provided $10 million in savings for 90% of restaurants and 87% of bars and nightclubs, which pay thousands in fees every year. Citywide, 10,722 businesses have enrolled in the First Year Free program.