Stacy,
Here are a few replies to your questions.
Are small business loans the way to go?
If you are going to get a business loan, I'd suggest finding a CPA who can help you with this. Cost could range anywhere from $200 - $800. You should be able to find a CPA practice that is not too large and he/she can help you make a business plan etc - etc.
You'll need to check with your lending agency to see what info they require and if you need collateral backing you.
A loan can help when you don't have a part-time job or money backing you.
Should I focus on massage or offer spa treatments as well?
Depends on where you practice and the room you have. If you have a wet area (shower/bath) of course it will make it easier to offer these treatments.
There are some spa things you can do without water and only moist towels. (Parafango comes to mind.)
There is also a steam cabinet you might want to use.
http://www.steamywonder.com/SteamyWonder.html
http://www.newlifesystems.com/Merchant2/merchant.mv?Screen=PROD&Store_Code=NLS&Product_Code=SW107&Category_Code=5
What is the most important item (other than a table,oils,etc) needed before starting a business?
Table, lotion, sheets, pillows, a gown or two, some towels, music, foot stool, radio/CD player. Those should be enough to get you going.
Consider getting a receipt book system for your customers too. They may want to use you as a write off on their taxes, or even submit your services to an insurance company for reimbursement.
What is the best way to advertise?
Word of mouth seems to be best, but this is slow at the start.
Hand out those business cards and link up with some special people who will refer to you.
You can also sometimes get a fairly inexpensive add in a local paper or holistic magazine.
How much money is needed to start up?
A fair estimate so you are not in a huge pinch would be somewhere in the neighborhood of ~$10,000.00 (but this highly depends on where you are and what you want to do - you would have to sit down and make your own evaluation of your pocketbook, needs and wishes).
On a serious budget, it will all depend on if you rent, if you use your home, if you pay a split fee, things like that.
Let's look at some generalized costs and then you can see where you fit in.
Office space: $900/mo. You will need first and last months rent.
Business owners insurance: $50/mo.- You'll need this if you rent space.
Malpractice: $200/year
Flood Insurance: $350/year If you are in a flood plane.
Phones: $40 - 120/month Depending on if you use cell or straight office phones.
Air/Heat: $250/month
Supplies: $1,500 Things like - table, lotions, sheets, lamp, pens, pencils, appointment book, folders, computer program (if you use a comp), etc.
Laundry Detergent $15.00/month - hard to say on that one, I buy "Sun" detergent at Wal-mart for really cheap and it does a great job and lasts a long time, longer than a month I know... so hey, you can save a few bucks there and eat out!
Water for clients: $30/month
A few chairs for your clients to sit in: $60
Desk: $100
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And of course, you can do all of this a lot less expensive, if you just don't have the money - especially by looking at the thrift stores and whatnot.
Hope that helps.