Just be honest with her. Your business has grown, and you need to expand. You obviously are not going to rent another space, since you own the upstairs already. If her business is profitable, then she can afford to rent some other space. If it's not profitable, she needs to do something else. She should be grateful that you allowed her to stay there for free. If she's not grateful, then your better off without her. If you think she has the skills to work for you, maybe you could hire her. That way she would have something to do. Good luck.