EXHIBIT 10.26


                             AMENDMENT NUMBER TWO TO
                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT


         THIS AMENDMENT NUMBER TWO TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT ("Amendment"), is entered into as of March 13, 1998, between FOOTHILL
CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of
business located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles,
California 90025-3333, and CHILDREN'S BROADCASTING CORPORATION, a Minnesota
corporation ("Borrower"), with its chief executive office located at 724 First
Street, Fourth Floor, Minneapolis, Minnesota 55401.

         WHEREAS, Borrower and Foothill are parties to that certain Amended and
Restated Loan and Security Agreement, dated as of July 1, 1997, as amended by
that certain Amendment Number One to Amended and Restated Loan and Security
Agreement dated as of September 24, 1997 (collectively, the "Loan Agreement");

         WHEREAS, Borrower has requested that Foothill make an additional term
loan in the amount of $1,000,000 (the "Supplemental Term Loan No. 2"), and the
proceeds of such Supplemental Term Loan No. 2 will be used in part to pay
Foothill the amendment fee described in Section 7(d) of this Amendment. In
addition, Borrower will use the balance of the proceeds of the Supplemental Term
Loan No. 2 for general working capital purposes;

         WHEREAS, Borrower and Foothill have agreed to combine the term loans
previously made by Foothill to Borrower and the Supplemental Term Loan No. 2
into a single term loan that will repaid by Borrower in accordance with the
terms of this Amendment; and

         WHEREAS, Borrower and Foothill desire to amend the Loan Agreement as
provided in this Amendment, it being understood that no repayment of the
obligations under the Loan Agreement is being effected hereby, but merely an
amendment and restatement in accordance with the terms hereof. All capitalized
terms used herein and not defined herein shall have the meanings ascribed to
them in the Loan Agreement.

         NOW, THEREFORE, in consideration of the mutual promises contained
herein, Foothill and Borrower hereby agree as follows:

         1. Section 1.1 of the Loan Agreement hereby is amended by (a) deleting
the following defined terms in their entireties: "Amendment Date", "Term Loan"
and "Term Loan Commitment", and (b) inserting following defined terms in
alphabetical order:

         "Amendment Date" means the date of the making of the Additional
Supplemental Term Loan No. 2 on or after the first date written above.

         "Fourth Warrant" means a warrant agreement respecting 100,000 shares of
Borrower's common stock, in form and substance reasonably satisfactory to
Foothill.

         "Supplemental Term Loan No. 2" shall have the meaning ascribed to such
term in the recitals of this Amendment.

         "Term Loan" has the meaning ascribed to such term in Section 2.2(a)
hereof.

         "Term Loan Commitment" means $23,500,000.

         2. Section 2.1(b) is hereby amended and restated in its entirety as
follows:

<PAGE>


         (b) Anything to the contrary in Section 2.1(a) above notwithstanding,
         Foothill may create reserves against the Maximum Revolving Amount
         without declaring an Event of Default if there occurs a material
         increase in Dilution or if Foothill determines that there has occurred
         a Material Adverse Change. Notwithstanding the previous sentence, it is
         hereby agreed among the parties hereto, that Foothill may establish, in
         its discretion, and from time to time, an accumulating interest payment
         reserve, funded on a monthly basis, in an aggregate amount, as
         determined by Foothill in its reasonable discretion from time to time,
         sufficient to fully fund the estimated interest payment to be due
         Foothill on Borrower's Obligations as of the end of such month; and all
         collections received by Foothill pursuant to Section 2.8 of this
         Agreement shall be accumulated and held by Foothill until such time as
         the estimated interest payment is fully funded into the reserve, and
         any collections received by Foothill during such month after the full
         funding of the reserve, shall be credited by Foothill to Borrower's
         account; and in the event that the actual interest payment for a given
         month is less than the reserve amount accumulated during such month,
         the difference shall be carried forward by Foothill as the initial
         reserve amount for the next succeeding month's accumulation of
         collections to the reserve to fund the next month's estimated interest
         payment, such interest payment reserve and the accumulation of
         collections to be effective and commence as of the Amendment Date.

         3. Section 2.2 of the Loan Agreement is hereby amended and restated in
its entirety as follows:

         2.2 TERM LOAN.

                  (a) Foothill previously has made the Term Loan to Borrower. As
of the Amendment Date, Foothill has agreed to make the Supplemental Term Loan
No. 2 to Borrower in accordance with the terms hereof. Collectively, the
Supplemental Term Loan No. 2 and the prior term loans made by Foothill to
Borrower shall be known as the "Term Loan."

                  (b) The outstanding principal balance and all accrued and
unpaid interest under the Term Loan shall be due and payable upon the
termination of this Agreement, whether by its terms, by prepayment, by
acceleration, or otherwise. All amounts outstanding under the Term Loan shall
constitute Obligations. Unless sooner terminated as provided herein, Borrower
shall repay the Term Loan in quarterly installments and such installments shall
be due and payable on the following dates in the following amounts:

<PAGE>


                      DATE                  INSTALLMENT
                      ----                  -----------
                      4/16/98               $  500,000
                      6/30/98               $6,000,000
                      9/30/98               $2,000,000
                      12/31/98              $2,000,000
                      3/31/99               $2,000,000
                      6/30/99               $2,000,000
                      9/30/99               $2,000,000
                      12/31/99              $2,000,000
                      3/31/00               $2,000,000
                      6/30/00               $2,000,000
                      9/30/00               $1,000,000

         4. Section 2.6(a) of the Loan Agreement is hereby amended and restated
in its entirety as follows:

         "Interest Rate. From and after the Amendment Date, all Obligations
         shall bear interest at a per annum rate of 4.75 percentage points above
         the Reference Rate."

         5. Section 2.6(c) of the Loan Agreement is hereby amended and restated
in its entirety as follows:

         "Default Rate. Upon the occurrence and during the continuation of an
         Event of Default, all Obligations shall bear interest at a per annum
         rate of 7.75 percentage points above the Reference Rate."

         6. Section 7.17 of the Loan Agreement is hereby amended to delete the
proviso at the end of such Section, and to replace such proviso with the
following:

         ;provided, however, that in no event shall any advance under the
         Supplemental Term Loan No. 2 be used to finance, in whole or in part,
         directly or indirectly, any Permitted Unrestricted Subsidiary
         Acquisition or to advance, by way of loan, investment or guaranty, or
         otherwise, any monies or credit to or for the benefit, directly or
         indirectly, of Harmony.

         7. Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment and the obligation of Foothill to make the
Supplemental Term Loan No. 2 is subject to the completion, to the satisfaction
of Foothill and its counsel, of each of the following conditions on or before
the Amendment Date:

                  (a) Foothill shall have received executed consents and
reaffirmations from each Guarantor, in form and substance satisfactory to
Foothill;

                  (b) Foothill shall have received the Fourth Warrant and such
Fourth Warrant shall have been duly executed, and be in full force and effect;

<PAGE>


                  (c) Foothill shall have received, in form and substance
reasonably satisfactory to Foothill, an amendment and restatement of the Second
Warrant to Purchase 100,000 Shares of the Common Stock of Children's
Broadcasting Corporation dated July 1, 1997, resetting the warrant exercise
price from $5.29 to $3.68 per share, and such Amended and Restated Warrant shall
have been duly executed, and be in full force and effect; and

                  (d) Foothill shall have received an amendment fee of $100,000
which shall be earned in full and non-refundable as of the date hereof. The
payment of such amendment fee shall be paid on the Amendment Date out of the
proceeds of the Supplemental Term Loan No. 2.

         8. Forbearance. Foothill acknowledges receipt of the Borrower's letter
to Mr. Keith Alexander of Foothill dated March 3, 1998 in which the Borrower
acknowledges and enumerates certain Events of Default that have occurred and are
continuing under the Loan Agreement (the "Current Defaults"). Foothill hereby
agrees to forebear from taking any action or exercising any of its remedies
under the Loan Agreement with respect to the Current Defaults during the period
from the Amendment Date through and including April 16, 1998; provided, however,
that such forbearance shall apply only to the Current Defaults, shall not apply
to any other Event of Default continuing as of the Amendment Date, or to any
Event of Default that may occur after the Amendment Date. Further, this
forbearance shall not constitute a waiver by Foothill of any of its rights or
remedies under the Loan Agreement, but shall only constitute a limited
forbearance. Furthermore, nothing contained in this letter shall diminish,
prejudice or waive any of Foothill's rights or remedies under the Loan Agreement
or applicable law, and Foothill hereby reserves all such rights and remedies.

         9. Representations and Warranties. Borrower hereby represents and
warrants to Foothill that (a) the execution, delivery, and performance of this
Amendment, are within its corporate powers, have been duly authorized by all
necessary corporate action, and are not in contravention of any law, rule, or
regulation, or any order, judgment, decree, writ, injunction, or award of any
arbitrator, court, or governmental authority, or of the terms of its charter or
bylaws, or of any contract or undertaking to which it is a party or by which any
of its properties may be bound or affected, and (b) the Loan Agreement, as
amended by this Amendment, constitute Borrower's legal, valid, and binding
obligation, enforceable against Borrower in accordance with its terms.

         10. Further Assurances. Borrower shall execute and deliver all
agreements, documents, and instruments, in form and substance satisfactory to
Foothill, and take all actions as Foothill may reasonably request from time to
time, to perfect and maintain the perfection and priority of Foothill's security
interests in the Collateral, and to fully consummate the transactions
contemplated under the Loan Agreement and this Amendment.

         11. Effect on Loan Agreement. The Loan Agreement, as amended hereby,
shall be and remain in full force and effect in accordance with its respective
terms and hereby is ratified and confirmed in all respects. The execution,
delivery, and performance of this Amendment shall not operate as a waiver of or,
except as expressly set forth herein, as an amendment, of any right, power, or
remedy of Foothill under the Loan Agreement, as in effect prior to the date
hereof.

         12. Miscellaneous.

                  a. Upon the effectiveness of this Amendment, each reference in
the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of
like import referring to the Agreement shall mean and refer to the Loan
Agreement as amended by this Amendment.

                  b. Upon the effectiveness of this Amendment, each reference in
the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof"
or words of like import referring to the Agreement shall mean and refer to the
Loan Agreement as amended by this Amendment.

                  c. This Amendment shall be governed by and construed in
accordance with the laws of the State of California.

<PAGE>


                  d. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Amendment by signing
any such counterpart.

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.



                                FOOTHILL CAPITAL CORPORATION,
                                a California corporation


                                By  /s/ Keith Alexander
                                   -----------------------------

                                Title:  Vice President
                                       -------------------------



                                CHILDREN'S BROADCASTING CORPORATION, a Minnesota
                                corporation


                                By  /s/ James G. Gilbertson
                                   -----------------------------

                                Title:  Chief Operating Officer
                                       -------------------------

<PAGE>


             CONSENT, RATIFICATION, AND REAFFIRMATION BY GUARANTORS

         Each of the undersigned Guarantors hereby consents to the execution,
delivery, and performance of the foregoing Amendment Number Two to Amended and
Restated Loan and Security Agreement and agrees, ratifies, and reaffirms that
its obligations as a guarantor with respect to the Loan Documents, as heretofore
amended, and as amended by the foregoing amendment, remain in full force and
effect and are not impaired, diminished, or discharged in any respect.

Dated as of the date first set forth above:


                                CHILDREN'S RADIO OF LOS ANGELES, INC.,
                                Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF NEW YORK, INC.,
                                New Jersey corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF MINNEAPOLIS, INC.,
                                Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF GOLDEN VALLEY, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF MILWAUKEE, INC.,
                                a Minnesota corporation

<PAGE>


                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF DENVER, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF KANSAS CITY, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF DALLAS, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF HOUSTON, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF PHILADELPHIA, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------

<PAGE>


                                CHILDREN'S RADIO OF DETROIT, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------

                                CHILDREN'S RADIO OF CHICAGO, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                CHILDREN'S RADIO OF PHOENIX, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                WWTC-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                KYCR-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------

<PAGE>


                                WZER-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                KKYD-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                KCNW-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                KAHZ-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                KTEK-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                WPWA-AM, INC.,
                                a Minnesota corporation

<PAGE>


                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                WCAR-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                WJDM-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                KPLS-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                WAUR-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------


                                KIDR-AM, INC.,
                                a Minnesota corporation



                                By  /s/ James G. Gilbertson
                                   ------------------------------
                                Title: Chief Operating Officer
                                       --------------------------