You can add a new user with SFTP access by doing the following where the username you are creating is "newuser":

useradd newuser
passwd newuser
usermod -m -d /path/to/new/home/dir newuser

The first command "useradd" will create the new user.
The "passwd" command will prompt you to create a new password for the user
The "usermod" command sets a home directory for this new user.

You may also want to add the user to a group with permissions to the files you want this account to access. If this is your web root you can use:

useradd -g www-data newuser

thanks @ryanpq did the trick for me