Chinese SMEs are crucial to the economy, contributing greatly to employment, technological development, tax revenues, and economic growth. Despite this, SMEs have faced significant financial challenges constantly, which have prevented their developing sustainably. The utilization of digital technology within finance industry in recent years has expanded digital finance rapidly, thereby establishing digital financial inclusion as a vital instrument for mitigating the SME financing challenges. While existing research predominantly examines the direct effects of digital financial inclusion on SME financing constraints, but often neglects underlying pathways and mechanisms at play. According to the theory of information asymmetry, the study explains causes of SME financing constraints. Based on the theories of digital economy and financial inclusion, this study explains the important part of digital financial inclusion in reducing SME financing constraints; Moreover, through literature review, this study explores the mechanism of digital financial inclusion in alleviating SME financing constraints from the perspective of debt financing, and constructs a theoretical framework and research hypotheses. The paper examines listed SMEs of China's Shenzhen Stock Exchange from 2011 to 2023, investigating the impact of digital financial inclusion on SME financing constraints and the mechanisms involved. The direct effect analysis reveals the advancement of digital financial inclusion has demonstrably reduced SME financing constraints in China. In addition, the mediating effect analysis suggests that digital financial inclusion expands both scale of bank loans and commercial credit financing for SMEs, consequently mitigating their financing constraints.