Custom Permalinks for Custom Post Types and Taxonomies

Here’s the method I use to get what you’re trying to achieve.

First, register your location taxonomy:

register_taxonomy(
    'location',
    array( 'business' ),
    array(
        'rewrite' => array( 'slug' => 'business-location' )
    )
);

Next, register the business post type. The important bit to note here is the inclusion of the %location% rewrite tag in the slug. We’ll use that to replace with the location term in the post_type_link function:

register_post_type(
    'business',
    array(
        'label' => 'Business',
        'public' => true,
        'rewrite' => array( 'slug' => 'business/%location%' ),
        'hierarchical' => false
    )
);

Now the function to swap in the location term:

function wpa_business_permalinks( $post_link, $id = 0 ){
    $post = get_post($id);
    if ( is_object( $post ) && $post->post_type == 'business' ){
        $terms = wp_get_object_terms( $post->ID, 'location' );
        if( $terms ){
            return str_replace( '%location%' , $terms[0]->slug , $post_link );
        }
    }
    return $post_link;
}
add_filter( 'post_type_link', 'wpa_business_permalinks', 1, 2 );